Updated on October 21st, 2025 by Bob Ciura
Investing in defense stocks has proven to be a lucrative opportunity for shareholders. Currently, the iShares Dow Jones U.S. Aerospace & Defense ETF (ITA) boasts annualized total returns of approximately 12.7% over the past decade. This impressive performance has prompted us to compile a downloadable spreadsheet focused on defense stocks.
This list is derived from two prominent defense industry-focused exchange-traded funds: ITA and the SPDR S&P Aerospace & Defense ETF (XAR). You can access an Excel spreadsheet containing essential metrics, including dividend yields and price-to-earnings ratios, by clicking the link below:
Are there further growth opportunities for these stocks? This article will delve into the top five defense stocks as identified by the Sure Analysis Research Database. We rank these stocks based on our projected five-year returns, which factor in current dividend yields, anticipated annual EPS growth, and any changes in valuation multiples.
Table of Contents
Defense Stock #5: Huntington Ingalls Industries Inc. (HII)
- Estimated Annual Returns: 0.0%
Huntington Ingalls Industries specializes in constructing nuclear and non-nuclear ships for the U.S. Navy, operating through three segments: Newport News Shipbuilding, Ingalls Shipbuilding, and Mission Technologies. In 2024, the company reported approximately $11.5 billion in revenue.
In its Q2 2025 report, Huntington Ingalls noted a 3.5% revenue increase, although diluted earnings per share fell by 11.9% to $3.86. Labor shortages and supply chain disruptions have negatively impacted operating margins, which decreased to 5.3% from 6.3%.
Defense Stock #4: Northrop Grumman (NOC)
- Estimated Total Returns: 0.9%
Northrop Grumman operates across four segments: Aeronautics Systems, Mission Systems, Defense Systems, and Space Systems. The company reported a 1% revenue increase in Q2 FY 2025, with diluted earnings per share rising 28% to $8.15.
With a total backlog of approximately $89.7 billion, Northrop Grumman secured $7.4 billion in contract awards during the quarter, including significant contracts for the F-35 program.
Defense Stock #3: Howmet Aerospace (HWM)
- Estimated Annual Returns: 1.8%
Howmet Aerospace is a key player in providing advanced engineered solutions for the aerospace and transportation sectors. In 2024, the company generated $7.4 billion in revenue, with a significant portion coming from its Engine Products segment.
In Q2 2025, Howmet reported a 9% revenue increase year-over-year, reaching $2.05 billion. The company also raised its dividend by 20% to $0.12 per share quarterly.
Defense Stock #2: Lockheed Martin (LMT)
- Estimated Annual Returns: 1.8%
Lockheed Martin is the largest defense contractor globally, with around 60% of its revenue derived from the U.S. Department of Defense. The company reported flat net sales in Q2 2025, with diluted GAAP earnings per share declining to $1.46 due to impairment charges.
Despite challenges, Lockheed Martin’s Aeronautics segment saw a 2% increase in sales, driven by higher F-35 volumes.
Defense Stock #1: General Dynamics (GD)
- Estimated Annual Returns: 2.4%
General Dynamics has a remarkable track record, having increased its dividend for over 30 consecutive years, making it a member of the exclusive Dividend Aristocrats list.
In Q2 2025, General Dynamics reported an 8.9% revenue increase, with diluted earnings per share rising to $3.74. The company’s Aerospace segment, which produces high-end Gulfstream jets, continues to perform well, contributing significantly to overall revenue.
Additional Reading
For those interested in dividend growth investing, consider exploring the following databases:
- The Dividend Achievers List features around 400 stocks with 10+ years of consecutive dividend increases.
- The High Yield Dividend Kings List includes the 20 Dividend Kings with the highest current yields.
- The High Dividend Stocks List showcases stocks with yields of 5% or more.
- The Monthly Dividend Stocks List features stocks that pay dividends every month.
- The Dividend Champions List includes stocks that have increased dividends for 25+ consecutive years.
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