Trump Says He's Halting Dividends, Buybacks For Defense Companies

• RTX (Raytheon) fell 4.7% and was specifically prohibited from buybacks until it 'gets their act together,' having spent tens of billions on repurchases
• Other major defense contractors also declined: Lockheed Martin down 4.7%, Northrop Grumman down 5%, and General Dynamics down 3.4%
• Trump also targeted 'exorbitant and unjustifiable' executive pay and demanded companies build new modern production plants for military equipment

Summary: Trump Halts Defense Company Dividends and Buybacks

Key Development:

President Donald Trump announced he will prohibit U.S. defense contractors from paying dividends and conducting stock buybacks until they increase weapons production capacity and accelerate delivery timelines. The directive was issued via Truth Social shortly after 2 p.m. ET.

Rationale:

Trump criticized defense companies for diverting capital to shareholder returns rather than investing in manufacturing plants and equipment. He also targeted "exorbitant and unjustifiable" executive compensation and complained about slow delivery schedules and inadequate weapons systems maintenance.

Companies Affected:

• RTX (Raytheon): Singled out for "special criticism" as the "least responsive" contractor, explicitly barred from additional buybacks after spending "tens of billions of dollars"
• Lockheed Martin (LMT): Fell 4.7% in heavy trading despite recently breaking out after securing air-defense missile orders
• General Dynamics (GD): Down 3.4% after attempting to clear a 369.50 buy point
• Northrop Grumman (NOC): Declined 5% in active trading
• Huntington Ingalls: Reversed 2.5% lower
• Textron (TXT): Reversed approximately 2% lower
• Boeing (BA): Little changed

Market Impact:

The iShares U.S. Aerospace & Defense ETF (ITA) reversed 1.5% lower following the announcement, erasing gains from a rally that began after the weekend military operation against Venezuelan leader Nicolas Maduro. The directive represents significant intervention in corporate capital allocation decisions within the defense sector.