Donald Trump has launched an extraordinary attack on America’s largest defence contractors, threatening to block dividends and share buybacks unless they accelerate weapons production, as he prepares a dramatic expansion of US military spending.
In a post on his Truth Social platform, the US president warned defence firms that he would no longer tolerate what he described as sluggish delivery of military equipment during “troubled and dangerous times”. His comments came ahead of plans to increase the US defence budget for 2027 by 50 per cent, taking annual military spending to $1.5 trillion.
Trump accused defence executives of prioritising shareholder returns and personal remuneration over national security, describing pay packages across the sector as “exorbitant and unjustifiable”. He suggested executive compensation should be capped at $5 million and said companies should redirect capital currently used for dividends and share buybacks into boosting production capacity.
“Military equipment is not being made fast enough,” Trump wrote. “It must be built now with the dividends, stock buybacks and over-compensation of executives, rather than borrowing from financial institutions or getting the money from your government.”
The remarks marked a rare and direct presidential intervention in capital allocation decisions on Wall Street. US defence stocks initially fell sharply in response. Shares in Lockheed Martin, Northrop Grumman, RTX and General Dynamics all declined during afternoon trading. Losses were later pared back after Trump confirmed his intention to significantly raise defence spending.
Trump singled out Raytheon, a subsidiary of RTX, accusing it of being “the least responsive to the needs of the Department of War”. He warned that if the company wanted future government contracts, it would be barred from carrying out further share buybacks.
The president did not clarify how such restrictions would be enforced, raising questions over the legal and regulatory mechanisms available to the White House. Analysts noted that buybacks and dividends are deeply embedded in the financial strategies of established defence firms, many of which rely on consistent shareholder returns to support their valuations.
Lockheed Martin, for example, raised its dividend for the 23rd consecutive year in October to $3.45 per share, while also authorising up to $2 billion in share repurchases, taking its total buyback commitment to more than $9 billion.
Trump’s criticism comes amid long-running concerns over delays and cost overruns in major US defence programmes. Lockheed’s F-35 fighter jet, one of the most expensive weapons systems ever developed, has faced repeated schedule slippages and rising costs. Meanwhile, Northrop Grumman’s Sentinel intercontinental ballistic missile programme, intended to replace the ageing Minuteman III system, is now projected to be 81 per cent over budget, according to the US military.
Neither Lockheed Martin nor Northrop Grumman responded to requests for comment.
For defence investors and contractors alike, Trump’s intervention underlines the growing political risk surrounding the sector, even as government spending is set to rise sharply. While a larger military budget promises long-term revenue growth, tighter scrutiny over executive pay, capital returns and delivery timelines could fundamentally reshape how defence firms operate in the years ahead.
