Dear Mr. Berko:

Dear G.S.:

Frankly, it doesn’t make a tinker’s damn worth of difference which one you choose. In the very profitable business of killing people, these companies are the very best and most skillful.

Some observers claim that Lockheed Martin Corp. (LMT-$76.52) might be closer to the congressional ear because its wallet owns the most powerful lobbying group in Washington. So your broker’s recommendation might be all wool and a yard wide.

In the past decade, LMT’s revenues have doubled to $46 billion, and net income has tripled to $7.43 a share. LMT’s dividend has increased every year since 2001, from 44 cents to $4 (current yield: 5.2 percent), and it could be increased in 2012 to $4.40. LMT makes fighter planes, troop transports, missiles, guidance systems and other military technology and has $4 billion in cash and 133,000 employees. The Street believes that in the coming four years, LMT could trade at $135.

Northrop Grumman Corp.’s (NOC-$55.70) airborne systems, electronic warfare devices, fighter planes and weapons systems produced $27 billion in revenues, a $2 billion net profit ($6.90 a share) and a $2 dividend yielding 3.6 percent in 2011.

NOC’s revenues have doubled in the past decade; the dividend grew 250 percent and might be increased to $2.24 this year. The Street expects 2012 revenues to top $28.5 billion and earnings to exceed $7.25 a share. At 7.5 times earnings, some think NOC is preferable to LMT, which trades at 10.5 times earnings. The Street price talk for this 137,000-employee company is in the high $90s in a few years.

Raytheon Co.’s (RTN-$44.80) 75,000 employees generated $26 billion in revenues from the design, sale and manufacture of defense electronics, ground-to-air missile systems, air intercept missiles, radar systems and other military products. In the past 10 years, revenues grew 75 percent, earnings grew fourfold, and the dividend more than doubled to $1.72 per share, providing investors with a 3.8 percent yield. Trading at a 7.6 price-earnings ratio and with expected 2012 revenues of $27.5 billion, improved earnings from $5 now to $5.55 per share in 2012 and a continually growing dividend, RTN could trade in the middle to high $80s by 2014.

I suggest dividing that $14,000 equally among the three. Because each has a captive client (about 85 percent to 90 percent of their revenues derive from the federal government), consider the highly speculative nature of these companies. If peace were to break out, the economic results could be calamitous.

I don’t believe the current American mood would tolerate the resulting increase in unemployment. So say a special prayer in the amen corner of your church that peace on earth will never come. Can you imagine the economic and social disaster that would ensue?

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or email him at malber@adelphia.net. ©2011 Creators.com