In 2025, the aerospace and defense sectors have showcased remarkable performance. The SPDR S&P Aerospace & Defense ETF (NYSEARCA: XAR) has delivered a total return of nearly 31% year to date, significantly outpacing the S&P 500 Index, which has only seen a 10% return. Such strong performance often leads to desirable outcomes for investors, including dividend increases.
Here, we highlight three aerospace and defense stocks that have not only posted impressive returns in 2025 but have also announced substantial dividend boosts. Each of these companies has increased their dividends by 20% or more, enhancing the income aspect of their return profiles.
TDG Boost’s Special Dividend, Lifting Yield Above 6%
First on our list is Transdigm Group (NYSE: TDG), which recently made headlines with a significant dividend announcement. On August 20, the board approved a remarkable increase to Transdigm’s special dividend, raising it to $90 per share. This represents a 20% increase from the 2024 special dividend of $75 per share.
The new special dividend is set to be paid on September 12 to shareholders of record as of the September 2 close. It’s important to note that Transdigm only pays a special dividend and does not issue regular quarterly dividends. Nevertheless, the stock now boasts a substantial indicated dividend yield of 6.4%, alongside a nearly 10% appreciation in share value in 2025.
Wall Street analysts are optimistic about this stock, with the MarketBeat consensus price target for Transdigm at just under $1,625, suggesting a potential upside of around 17%.
Transdigm’s latest special dividend is nearly five times larger than the $18.50 special dividend paid in 2022, indicating that further increases could be on the horizon.
ESLT Raises Dividend 20% After Massive Rally
Next is Elbit Systems (NASDAQ: ESLT), which has achieved a remarkable total return of 78% in 2025. Following the release of its latest financials on August 13, the company declared a new quarterly dividend of 75 cents per share, marking a 25% increase from the previous dividend of 60 cents.
This new dividend will be paid on October 27 to shareholders of record on October 14. The stock now has an indicated dividend yield of approximately 0.65%. Despite the second dividend increase within a year, the yield has decreased as shares have surged, appreciating around 131% during this period.
Currently, MarketBeat tracks only one Wall Street analyst covering Elbit, but even with the stock’s impressive rise, Bank of America sees further potential for growth. Their $500 price target suggests an upside of about 9%.
Howmet Lifts Dividend for Third Time in Less Than Two Years
Finally, we have Howmet Aerospace (NYSE: HWM), which has achieved a total return of nearly 57% in 2025. In its latest financial results released on July 31, Howmet reported record revenue and profit.
The firm also announced a substantial 20% increase to its quarterly dividend, which now stands at 12 cents per share. Although the record date for this payment has already passed, investors can expect a payment of 12 cents or more in future quarters, as this marks the third increase since early 2024.
However, dividends remain a relatively minor component of the stock’s return profile, with Howmet’s indicated dividend yield at just under 0.3%.
Defense Dividends Show the Industry’s Strength
These three companies are clearly confident in their business prospects, allowing them to return more cash to shareholders. Such increased commitments are a testament to the current strength of the defense industry.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
