Trump Orders Defense Contractors to Halt Dividends and Buybacks Amid Production Concerns
Written by Emily J. Thompson, Senior Investment Analyst
Source: Benzinga
- Defense Stocks Decline: Following Trump's order for defense contractors to halt dividends and share buybacks, the iShares U.S. Aerospace & Defense ETF (ITA) fell over 1%, ending a three-day winning streak, reflecting market concerns over cash returns and capital allocation.
- Underinvestment in Production: Trump criticized defense companies for issuing high dividends and conducting stock buybacks instead of investing in production facilities, leading to slow military equipment production and maintenance, which undermines national defense capabilities.
- Executive Pay Restrictions: Trump stated that executive compensation in the defense sector is excessive, mandating that salaries should not exceed $5 million until production and maintenance issues are resolved, which will impact the incentive structures of company executives.
- Rapid Market Reaction: Investors quickly sold off defense stocks, worried about the implications for near-term shareholder returns and corporate flexibility, indicating that the defense sector's reputation as a stable income play may be at risk.
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Analyst Views on LMT
Wall Street analysts forecast LMT stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for LMT is 535.50 USD with a low forecast of 430.00 USD and a high forecast of 605.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
12 Analyst Rating
4 Buy
7 Hold
1 Sell
Hold
Current: 622.510
Low
430.00
Averages
535.50
High
605.00
Current: 622.510
Low
430.00
Averages
535.50
High
605.00
About LMT
Lockheed Martin Corporation is a global aerospace and defense company. The Company is engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. Its segments include Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. Aeronautics segment is engaged in the research, design, development, manufacture, integration, sustainment, support and upgrade of advanced military aircraft. MFC segment provides air and missile defense systems, manned and unmanned ground vehicles, energy management solutions, and others. RMS segment designs, manufactures, services and supports various military and commercial helicopters, surface ships, sea and land-based missile defense systems, and others. Its Space segment is engaged in the research and design, development, engineering and production of satellites, space transportation systems, and strategic, advanced strike, and defensive systems.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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