5 Best Defense Stocks to Buy for Q3 2024

defense stocks are value investments that perform well in all economic conditions. This page picks the top defense stocks and shows you how to buy them.
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Updated: Jul 5, 2024

The defense industry is growing at a fast pace as geopolitical tensions rise globally. Russia has invaded Ukraine, raising the possibility of a broader war in Europe. Israel is fighting with Gaza and tensions in the Middle East are soaring. Also, there are chances that China will invade Taiwan in the next few years.

As a result, countries in the Western world are boosting their defense spending, with the US leading the way. The Senate is considering boosting spending to about 5% of GDP. The same is happening in Europe, a continent that has lagged behind in defense spending. All these events will benefit companies in the military-industrial complex.  

What are the top defense stocks to buy?

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Our analysts have selected their best five defense stocks for the year ahead listed in the table below. You can click each one’s ticker for up to date price information or continue reading to learn more.

#Stock symbolCompany nameLearn more
1LMTLockheed MartinLearn more >
2NOCNorthrop Grumman Corp.Learn more >
3LHXL3Harris TechnologiesLearn more >
4GDGeneral DynamicsLearn more >
5RTXRTXLearn more >
List selected by our team of analysts, updated July 2024.

1. Lockheed Martin (NYSE: LMT)

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  • Market Cap: $112 billion
  • Dividend yield: 2.68
  • Forward revenue growth: 3%
  • Forward P/E ratio: 18
  • Stock price: $470

Lockheed Martin Corporation is one of the biggest companies in the military-industrial complex with over $67.6 billion in annual revenues and $6.9 billion in profits.

The company manufactures most things that are needed in the defense industry. Its business is divided in key segments like aeronautics, which manufactures planes like the F-35 and the F-16, missiles and fire control (MFC), rotary and mission systems, and space. 

The other notable products are patriot missiles, apache fire control, and Sikorsky helicopters, All these items will be in high demand as the warfare continues. 

Lockheed Martin is a highly profitable company with a great track record of generating robust profits over the years. It is also a well-dependable dividend payer that has a record of growing its payouts for 21 years. Most importantly, its payout ratio of 44% is lower than other companies.

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2. Northrop Grumman Corp. (NYSE: NOC)

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  • Market Cap: $65 billion
  • Dividend yield: 1.8%
  • Forward revenue growth: 5.6%
  • Forward P/E ratio: 17
  • Stock price: $470

Northrop Grumman is another leading defense company that manufactures a wide array of products used in the military. It operates in three key segments: aeronautics, defense systems, mission systems, and space systems.

The company makes some of the best-known products like multiple launch rocket systems, hypersonic attack cruise missiles, scalable agile beam radar, and intercontinental ballistic missiles. 

Northrop Grumman’s business has grown steadily in the past few years, helped by the robust defense spending. Its annual revenue has jumped from over $33.8 billion in 2019 to over $39.29 billion. Its annual profit jumped to over $2 billion. 

Northrop Grumman is one of the best defense stock to invest in because of its strong portfolio, cheaper valuation, and its track record of revenue growth. It has also boosted its dividends for 20 straight years and has a low payout ratio of about 31%. 

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3. L3Harris Technologies (NYSE: LHX)

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  • Market Cap: $42 billion
  • Dividend yield: 2.09%
  • Forward revenue growth: 9%
  • Forward P/E ratio: 17
  • Stock price: $470

L3Harris Technologies is a giant defense company that manufactures numerous products like avionics, wireless equipment, space and intelligence systems, and air traffic management systems.

The company’s business has been growing well in the past few years. In 2023, it generated over $19 billion in revenue, a big increase from the $17 billion it made a year earlier. The company has also become highly profitable with over $1.2 billion. 

It also has a huge backlog worth over $32.7 billion. Most importantly, it has a track record of growing its dividend for 22 years. Its dividend yield of 2.09% and payout ratio moved to 36.4% also make a good company to invest in. 

L3Harris manufactures things that are highly needed in the military and demand will likely continue growing in the coming years. 

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4. General Dynamics (NYSE: GD)

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  • Market Cap: $81 billion
  • Dividend yield: 1.9%
  • Forward revenue growth: 7.4%
  • Forward P/E ratio: 20
  • Stock price: $299

General Dynamics is a leading company in the Military-Industrial Complex that manufacturer a wide array of products in industries like aerospace, marine systems, and combat systems. It makes Gulfstream, jet aviation, ships, submarines, and other combat systems.

It has a backlog of over $93.6 billion, one of the biggest ones in the industry. It generated over $42.3 billion in annual revenue in 2023, higher than what it generated in 2019. Its net profit has jumped to more than $3.3 billion. 

The company has a long track record of generating and growing dividends to investors. It is a dividend aristocrat that has grown its payouts for 29 years. Like the other two companies, it has a payout ratio of 43.8% and a dividend yield of 1.90%.It is also highly diversified since it has a presence in the civil and defense industry. 

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  • Market Cap: $143 billion
  • Dividend yield: 2.3%
  • Forward revenue growth: 7.4%
  • Forward P/E ratio: 20
  • Stock price: $108

RTX Corporation, formerly known as Raytheon, is the biggest company in the defense industry. It is made up of companies like Raytheon, Pratt & Whitney, and Collins Aerospace. 

RTX Corporation has a backlog of over $196 billion. Most of its sales are in the United States followed by Europe, Asia Pacific, and Middle East and North Africa. 

The company’s annual revenue has jumped from over $45.3 billion in 2019 to over $71 billion in the trailing twelve months (TTM). It also generated a net profit of over $3.4 billion.

RTX is one of the top dividend aristocrats in the US, having paid and grew its payouts for over 30 years. It also has a giant backlog and demand for its products is growing.

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Where to buy the best defense stocks

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To buy the top defense stocks, you must first register with an online broker. We recommend the brokers below, which offer low fees and easy to use services.

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What is a defense stock?

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defense stocks are companies that operate in the defense industry. Often, the main focus of these defense companies is to provide government agencies with products and services related to national security or military infrastructure.

Some companies, such as Rolls Royce and Raytheon Technologies Corp., also operate large commercial businesses and can generate growth through those operations as well.

Are defense shares a good investment?

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They tend to be safe investments, because there’s always a demand for the latest military and defense equipment. In times of geopolitical volatility, like in the aftermath of the Russian invasion of Ukraine, the defense sector becomes even more popular.

Generally, defense companies get the bulk of their revenue from one customer. That customer tends to be a government, often the U.S government or its allies. Companies operating in the defense sector are often awarded multi-billion dollar contracts, which gives them a lot of spending power over a long period of time to spread around the rest of the industry.

This reliance on a single source of revenue could be risky if government policy relied on reducing defense spending, but in practice that’s rarely viable politically. In fact, government defense budgets have been increasing of late, and President Biden recently requested $750 billion for US national defense.  There is relatively consistent demand for things like aircraft carriers and military transport, which can either be used or sold to friendly governments.

Stocks in this sector are often good long term investments, and with many companies paying growing dividends, they also deliver consistent income to investors. Whatever you decide to do, it’s a good idea to conduct well balanced fundamental analysis prior to investing. Its also helpful to keep up to date with the latest news and analysis which you can do by clicking on the links below. 

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Methodology: How we choose the best defense stocks

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At Invezz, our mission is to empower our readers with the most accurate and reliable financial information. Our curated selection of the best stocks in specific industries is designed to provide investors with well-researched, expertly reviewed stock recommendations. Our team follows a rigorous process to ensure our readers receive high-quality, trustworthy stock selections.

  • Initial screening. Our team of experienced stock market analysts conducts an initial screening of stocks within the chosen industry. This involves analyzing a broad range of companies based on key financial metrics such as revenue growth, profitability, debt levels, and market capitalization.
  • Earnings reports and financial analysis. Analysts review the latest earnings reports of shortlisted companies. This includes a detailed assessment of financial statements, looking for consistent earnings growth, strong balance sheets, and positive cash flow trends. Special attention is given to year-over-year performance and quarterly results.
  • Sector analysis. A comprehensive sector analysis is conducted to understand the macroeconomic factors affecting the industry. This includes examining market trends, competitive landscape, regulatory changes, and technological advancements. Our analysts utilize industry reports, market research, and economic forecasts to gain a holistic view of the sector.
  • Analyst recommendations. We consider recommendations from reputable sources such as Barron’s and Zacks. These sources provide expert opinions and ratings on stocks, which serve as an additional layer of validation for our selections. Incorporating external analyst recommendations ensures that our curated stocks are backed by a consensus of expert views.
  • Internal review. After the initial selection by our analysts, the chosen stocks are reviewed by a sub-editor. The sub-editor ensures that the analysis is clear, concise, and adheres to Invezz’s editorial guidelines. This review process helps maintain the quality and readability of our content, making it accessible to a broad audience.
  • Quarterly updates. To ensure our stock recommendations remain relevant and up-to-date, we update the curated section quarterly. Each update cycle involves re-evaluating the stocks based on the latest financial reports, industry developments, and market conditions. This regular update process ensures that our recommendations reflect the most current information available.

Our approach combines expert analysis, comprehensive research, and regular updates to deliver reliable and insightful investment recommendations. Read more about our review process and editorial policy.

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Crispus Nyaga
Market Analyst
Crispus is a Financial Analyst for Invezz covering the stock, cryptocurrency and forex markets. He’s an experienced analyst with more than 8 years of industry experience.... read more.
James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.