The Pentagon Keeps Spending. These 4 Defense Stocks Keep Raising Their Dividends

Most industrials live and die by the next order cycle. Defense primes book work on government contracts that stretch across several federal budget cycles, so their backlog behaves like a schedule of future cash receipts. One Lockheed Martin (NYSE:LMT | LMT Price Prediction) award, a seven-year contract valued at $35 billion for THAAD interceptors, shows how far that visibility can reach. This bundle is built around dividend growth and payout durability. All four carry modest yields. The appeal lies in long records of raising the quarterly check, backed by free cash flow guidance large enough to fund the next increase. For each stock, the income figure shown is the annualized forward dividend alongside the current share price.

Lockheed Martin: A Record Backlog Stands Behind Every Quarterly Check

Lockheed builds the F-35 fighter, THAAD missile-defense interceptors, radars, hypersonic weapons and space systems for the U.S. government and allied militaries. Second-quarter revenue reached $20.06B (+10.5% YoY), and EPS of $7.94 beat the $7.20 estimate.

Income snapshot: The quarterly dividend is $3.45, an annualized forward payout of $13.8 per share against a current price of $510.61. Shares slipped 8.44% over the past month, so the yield on that payout is now measured against a lower share price.

Dividend safety: Management guides to 2026 free cash flow of $7.0 billion to $7.2 billion, after second-quarter free cash flow of $2.92B. Dividends cost $816 million in the first quarter and $796 million in the second. Full-year EPS guidance of $29.95 to $30.65 sits comfortably above the annual dividend. The CFO said the quarter showed “that we can invest for growth and deliver tangible shareholder value at the same time,” and management cites a strong credit rating as backing for its investment plans.

Track record: Lockheed lifted the quarterly rate from $3.3 to $3.45 starting with the 2025-12-01 ex-dividend date, after a prior step from $3.15 to $3.3. Every change in the quarterly rate since $0.11 in 2002 has been an increase. The last two raises were declared on 2025-10-09 and 2024-10-02, so keep an eye on the next declaration.

Bull case: Backlog sits at a record $230.42B, second-quarter book-to-bill hit 3.2 to one, and guidance went up across sales, EPS and free cash flow. Management said: “This deep book of contracts will fuel our sales growth for years to come.”

Risk: Program concentration. F-35 deliveries fell to 19 from 50 YoY in Q2. Management expects the 156-per-year production rate to hold but concedes funding depends on congressional and administration budget decisions. With one aircraft program this central, delivery slowdowns flow directly into cash timing.

General Dynamics: Cash Piling Up While the Shipyards Fill

General Dynamics (NYSE:GD) spans Gulfstream business jets, nuclear submarines, surface combatants, auxiliary ships and land combat systems. Second-quarter revenue rose to $14.1 billion, up 8.1%, and EPS of $4.24 beat the $3.97 estimate for a fifth straight EPS beat.

Income snapshot: The quarterly dividend is $1.59, a forward annual rate of $6.36 per share against a price of $332.75. The next ex-dividend date is 2026-10-09, with payment on 2026-11-13. Shares are down 10.39% over the past month.

Dividend safety: First-half free cash flow came to $3.6 billion, against $834 million in dividends paid during first half of 2026. Management raised its full-year cash conversion outlook to “around 105%” of net income. The balance sheet is moving the right way: cash of approximately $4.3 billion and net debt of $3.2 billion, down $1.2 billion in a single quarter after repaying $500 million of notes with no refinancing planned.

Track record: The dividend stepped up from $1.50 to $1.59 starting with the 2026-04-10 ex-dividend date. Every change in the quarterly rate since $0.23 in 2006 has been an increase.

Bull case: Backlog hit a record $136.5 billion, up 32% from a year ago, with total estimated contract value of $186.9 billion. Book-to-bill was 1.4 to 1 and topped 1 to 1 in all four segments, and full-year EPS guidance rose to $16.80 to $16.90.

Risk: Shipbuilding capital intensity. Marine margin runs at 7.3% versus 14.5% in Aerospace, and the CFO warned “the profile of our investment” will grow significantly in the back half, alongside an approximately $500 million pension contribution. Second-half cash flow will look thinner than the first.

RTX: Jet Engine Aftermarket Gives This Payout a Second Engine

RTX (NYSE:RTX) runs three businesses: Collins Aerospace ($8.21B in second-quarter revenue), Pratt & Whitney engines ($8.89B) and Raytheon defense systems ($8.27B). Its $289B backlog splits $162B commercial / $109B defense, making it the most commercially weighted name here.

Income snapshot: RTX pays $0.73 quarterly, a forward annual rate of $2.92 against a price of $185.68. The stock is up 12.61% over a year despite a 10.61% slide over the past month.

Dividend safety: Management raised 2026 free cash flow guidance to $8.50 to $8.75 billion, and second-quarter free cash flow reached $2.88B (vs. $69M prior year). Adjusted EPS guidance of $7.10 to $7.25 covers the forward dividend several times over. The chief executive said: “A commitment to the dividend, for sure. Obviously, we raised the dividend again here recently.” Debt reduction ranks alongside the payout among capital priorities.

Track record: The quarterly rate rose from 0.68 to 0.73 starting with the 2026-05-22 ex-dividend date. The record shows the rate reset to 0.475 in 2020, alongside a one-time 40.58 entry, and every change since has been an increase.

Bull case: Pratt commercial aftermarket sales grew 25%, and Raytheon posted a book-to-bill of 2.42. Civil aviation repair revenue and defense orders fund the same dividend, giving RTX two independent cash streams.

Risk: Commercial engine exposure. The Pratt & Whitney powder-metal GTF issue still requires accelerated inspections, with roughly $150 million of related compensation in the quarter. Management also flagged that part of second-quarter cash reflected timing and that inventory builds will weigh on working capital.

Northrop Grumman: Record Awards and a Marked-Down Share Price

Northrop Grumman (NYSE:NOC) builds the B-21 bomber, the Sentinel ICBM, munitions and a large slate of restricted programs. Second-quarter awards totaled $20B, including $7.6B Sentinel and $4.3B restricted, pushing backlog to a record $104.69B. EPS of $7.68 beat the $6.82 estimate.

Income snapshot: The quarterly dividend is $2.47, a forward annual rate of $9.88 against a price of $485.01. Shares are down 19.07% over the past year, so the rising payout is now measured against a lower share price.

Dividend safety: Northrop reaffirmed 2026 free cash flow guidance of $3.1 to $3.5B, after second-quarter free cash flow of $978M (+53.5%) offset a seasonal first-quarter outflow of -$1.82B. MTM-adjusted EPS guidance of $28.60 to $29.10 sits well above the dividend. The CFO said “we understand how important free cash flow is for our investors.”

Track record: The rate climbed from $2.31 to $2.47 starting with the 2026-06-01 ex-dividend date, following raises to $2.31 and $2.06 in the prior two years. Setting aside a one-time $6.366 payment in 2011, every change in the regular quarterly rate since $0.23 in 2004 has been an increase.

Bull case: Management expects full-year book-to-bill of at least 1.25 times and targets doubling international sales to $10 billion by 2031.

Risk: Fixed-price development and classified program dependence. Operating income fell 23.1% on $68M SiAW and $91M GEM 63XL unfavorable adjustments, while net income leaned on a one-time $179M IRS benefit. Restricted programs disclose little, so cost overruns tend to surface as surprise charges, and capex near 4.5% of sales in 2027 and 2028 for the B-21 ramp will compete with payout growth.

Four Raises in a Year Keep the Growth Story Intact

All four companies raised their quarterly dividends within the past 12 months, and all four guide to free cash flow that dwarfs what they pay out. Lockheed brings a record contracted book, General Dynamics a rapidly falling net debt, RTX a commercial cash stream layered on defense, and Northrop a classified franchise trading well below last year’s price. For income investors who prioritize rising checks over a big starting yield, this group offers long raise records worth researching.

If multi-decade raise records are the appeal here, it is worth looking beyond defense too. We ranked ten companies with 50-plus consecutive years of dividend increases by valuation in a free Dividend Kings report.

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