Another day, another all-time high for a major stock market index. Wall Street's seemingly unstoppable rise is great if you already own a lot of stock or are looking to trim a few positions and take profits. For buyers, however, it can be less appealing. The last thing anyone wants to do is overpay for an asset.

Fortunately, there are still bargains out there, even among large, well-known industry leaders. Consider, for example, Lockheed Martin (NYSE:LMT) and United Parcel Service (NYSE:UPS). Both sport excellent dividends that can provide investors with stable income no matter which direction share prices are moving. And for a number of reasons, each stock is a great buy now.

A piggy bank next to ascending stacks of coins marked "2021".

Image source: Getty Images.

The buy case for Lockheed Martin

Considering that it produced record-high revenue, net income, and free cash flow (FCF) last year, you might expect that shares of leading defense contractor Lockheed Martin would have performed impressively in 2020. But in fact, during a year when the broad-market S&P 500 index rose by 16%, Lockheed Martin shares declined by nearly 9%. 

LMT Revenue (TTM) Chart

LMT Revenue (TTM) data by YCharts

Part of what's fueling investors' skepticism about Lockheed Martin is concern about its growth rate. After posting double-digit percentage earnings growth earlier in 2020, Lockheed offered rather conservative guidance during its third-quarter conference call, forecasting little to no growth in cash from operations and a mere 2% to 3% increase in revenue. The more recent guidance it offered in conjunction with its fourth-quarter report was a little better than those preliminary estimates.

Metric

Midpoint Of 2021 Guidance Range

2020 Results

Forecast Growth

Revenue

$67.8 billion

$65.4 billion

3.7%

Diluted Earnings Per Share

$26.15

$24.30

7.6%

Cash From Operations

At least $8.3 billion

$8.18 billion

1.5%

Data source: Lockheed Martin. 

What's more, many of Lockheed's programs were funded by the recently approved Department of Defense Appropriations Bill from its biggest customer -- the U.S. government. Early funding, long-term contracts, and an impressive $147 billion backlog should make Lockheed's 2021 performance fairly predictable. Although its growth will be slower than it was last year, at least that's growth you can count on.

Lockheed Martin's strong business performance and languishing stock price have pushed the stock's valuation down to near its three-year lows.

LMT PE Ratio Chart

LMT PE Ratio data by YCharts

Given the company's adjusted guidance, predictable earnings, and its 20th consecutive annual dividend raise, this looks to be a conservative income stock worth adding to your portfolio right now.

The buy case for United Parcel Service

Though the logistics giant exceeded expectations and delivered record-high revenues, shares of UPS have barely budged over the last six months. One reason is that the stock price probably got ahead of itself over the summer -- surging by more than 30% in one month alone. The bigger reason, though, is that UPS's stellar 2020 performance was powered in part by the pandemic as people did more of their shopping using e-commerce to avoid making trips to physical stores. Wall Street is less focused on short-term results in this case. Instead, investors are waiting to learn if UPS can continue posting excellent numbers after the threat of the coronavirus recedes.

In a lot of ways, that's a good thing for long-term investors. If you're going to be a net buyer of stocks over the next few decades, the last thing you want is to buy when prices have gotten ahead of themselves. The ideal situation is to find a good company that has the potential to grow its business for years, and that is trading at a fair price. Today, UPS seems to occupy that sweet spot.

Shares of UPS are beginning to look cheap for a number of reasons. In the fourth quarter, the company posted record-high revenue and adjusted operating income. More importantly, its profit margin improved -- and that will be the metric to watch in 2021. The company is delivering more packages than ever before, but many of those packages are lower-margin deliveries. UPS's bread and butter has been business-to-business (B2B) deliveries. This segment provides higher-margin revenue, but it declined over the course of the pandemic as the economy faltered. The good news is that those sales are rebounding nicely. In fact, U.S. B2B sales were down just 8.3% year over year in the fourth quarter. 

Management is confident that it can further grow operating profit margins in 2021 as B2B shipping recovers and it continues its focus on higher-margin segments. Examples include healthcare, automotive, and the company's most profitable segment -- international. This transportation company is also a leading distributor of COVID-19 vaccines, having been given federal approval to ship both the Pfizer/BioNTech and Moderna vaccines. Investors should monitor how well UPS does at retaining its market share in e-commerce, growing sales to smaller and medium-sized businesses, growing internationally, and recovering its B2B sales. The company is still adjusting to a new business environment, but it has the tools and the game plan to have another successful year.

Balance your portfolio with dividends

Like Lockheed Martin, UPS has been on a dividend-raising spree -- the hike it delivered in the first quarter will make 2021 the 11th straight year it has increased its payout. At their current share prices, Lockheed and UPS yield 3.1% and 2.5%, respectively, both better than the current market average of roughly 1.5%. More important than their dividend yields though, are the fundamentals of their businesses. Lockheed offers low but predictable growth at a cheap valuation and UPS is poised for even more growth that could make its shares look inexpensive at present prices. With the stock market regularly hitting new highs, picking up shares of cheap established dividend stocks can be a great way to de-risk your portfolio.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.