Four Dividend-paying Defense Stocks May Shine Amid Golden Dome

05/23/2025

The four dividend-paying U.S. defense stocks may shine from Golden Dome-related spending that could boost the stocks in that industry. The Golden Dome would take the form of a multilayered, $175 billion system that would include defensive U.S. space assets for the first time.

Dividend-paying defense stocks include virtually all large companies and even some others in the industry that could gain a share of contracts related to building the Golden Dome. President Donald Trump discussed his plans for the Golden Dome in a White House press briefing on Tuesday, May 20.

Four Dividend-paying Defense Stocks May Shine Amid Golden Dome: Trump’s Plan

President Trump also discussed the Golden Dome during his March 4 State of the Union address and again in further detail in his May 20 televised briefing from the Oval Office in the White House. Critics argue that the cost of the proposed nuclear shield would be astronomical, and it is unlikely to be able to protect the entire United States. Proponents like President Trump envision a system similar to the “Iron Dome” used by Israel to shoot down incoming missiles from its various foes, which could potentially protect neighboring Canada, too.

The middle-ground view is that the Golden Dome would be desirable but possibly impractical due to its high projected cost and potential to not meet expectations. The program also would need to be funded for many years and require expenditures that will be difficult to commit to with the federal government running a huge deficit and adding to it every year. The current U.S. national debt is just short of $36.89 trillion.

President Trump said that he hoped the Golden Dome would be ready by the time his term as president ends in 2029. The Golden Dome would be intended to stop any missile, whether fired from land, sea or space, he added.

In addition, Canada would be allowed to join the funding effort to ensure the shield protects its country, too, President Trump said. America is going to protect its citizens “like never before,” President Trump said.

“Everything is going to be made in the U.S.A.,” President Trump said.

Four Dividend-paying Defense Stocks May Shine Amid Golden Dome: HWM

Howmet Aerospace (NYSE: HWM) is an advanced engineering company in Pittsburgh that is not as well-known as giant U.S. aerospace and defense companies. But it offers some critical components in the F-35 joint strike fighter that hits Mach 1.6 under the thrust of potentially the most advanced engine on earth.

The joint strike fighter is built with cutting-edge materials, integrated airframe design and next-generation avionics to enable this fifth-generation fighter jet to operate with potentially unprecedented stealth, speed and agility in air-to-air and air-to-ground combat, company officials said.

In developing the complex fighter jet, Lockheed Martin (NYSE: LMT) turned to Howmet to provide key parts that include single-piece, forged aluminum bulkheads that form the backbone of the aircraft structure and save 300 to 400 pounds per jet, while cutting costs by 20%. The fighter jet also has titanium bulkheads and uses titanium to manufacture other airframe structures for all three F-35 JSF variants. Howmet further supplies single-crystal, nickel-based super alloy blades and vanes that operate in environments hotter than the melting point of the metal to propel the engine.

A seasoned stock picker who likes Howmet Aerospace as a buy recommendation is Jim Woods, who put the stock in his Investing Edge newsletter’s Top 10 Growth Accelerators portfolio. Howmet Aerospace is a top-performing pick in the Top 10 Growth Accelerators portfolio of Investing Edge.

Howmet Aerospace is up 50.95% year to date through the close of trading on Friday, May 23.

Woods also recommended Howmet as a stock in his Bullseye Stock Trader advisory service during February 2025. Despite the market’s volatility in recent weeks, both the Howmet stock and call options have been trending positively.

Chart courtesy of www.stockcharts.com

Despite mounting global tensions and conflicts, defense budgets are soaring worldwide. NATO is considering new gross domestic product (GDP) spending targets of 5%, up from the long-held 2%. In this climate of crises, countries aren’t just rearming — they’re digitally fortifying, according to U.S. Global Investors.

“President Trump’s first overseas trip since returning to office has unleashed a tidal wave of economic agreements across the Middle East,” U.S. Global Investors wrote in a recent research note. “In just a few days, Saudi Arabia, the UAE and Qatar unveiled plans that could total over $1 trillion, including a historic $142 billion arms deal with the United States, touted as the largest of its kind ever announced.”

Denver-based Palantir Technologies (NASDAQ: PLTR), recommended in TNT Trader on April 8, has jumped since then. Palantir is a software company that operates largely outside of the tariff fallout, and it recently announced a deal with NATO to supply it with the company’s Maven AI software.

The stock also is another recommendation of the Investing Edge newsletter led by Jim Woods, a former Army officer. The stock is up 63.04% since Jan. 1. Woods recommended the position in January in his Investing Edge publication, allowing his subscribers to be up substantially in the position even when the market was pulling back.

Jim Woods heads the Investing Edge newsletter and Bullseye Stock Trader.

Palantir’s partnership with the U.S. Army began in 2008 to design and deploy modern mission software with improved capabilities. The company’s solutions are used in nearly every Army mission, ensuring data is accessible for fast decision-making that allows the warfighter to out-think and out-pace the adversary, Palantir officials said.

Palantir seeks to operate as the “connective tissue” between Army personnel, data and resources by delivering critical information to the key decision-makers when needed, company officials stated. Its technology enhances the preparedness of soldiers who use wearable sensor and mobile technologies in the battlefield.

However, the huge amount of data produced risks overwhelming both the individual soldiers and the battlefield decision-makers who lead them. Palantir tries to harness hardware solutions, reduce system complexity and provide improved human-machine interfaces to aid soldiers in the field and commanders at a forward-operating base (FOB). Situational awareness powered by visual augmentation, sensor optimization and secure capabilities helps to reduce cognitive challenges, as well as to protect and to connect warfighters.

Four Dividend-paying Defense Stocks May Shine Amid Golden Dome: Special Forces

Those who remember the U.S. special forces locating al-Qaeda founder Osama bin Laden‘s compound in Abbottabad, Pakistan, where he was killed on May 2, 2011, may be interested to know that a Palantir software product called “Gotham” was rumored to have been used by counterterrorism analysts at U.S. government agencies to integrate and analyze data. The information could have included intelligence reports, surveillance and reconnaissance.

Before Woods launched the Investing Edge newsletter early in 2025, he served as a former Army paratrooper and combat veteran who tracks the defense industry closely. When it comes to military operations, aggression, manpower and firepower still require the right intelligence to win battles, Woods said. Palantir is a star performer in the Top 10 Growth Accelerators portfolio of Investing Edge.

“What Palantir does so well is provide the right intel,” Woods continued.

Intelligent ground systems are at the heart of the Army’s realization of a multi-domain operations concept, according to Palantir. The company’s goal is to empower commanders to make sense of a complex battlefield, requiring ground systems to aid understanding.

Chart courtesy of www.stockcharts.com

Four Dividend-paying Defense Stocks May Shine Amid Golden Dome: LMT

Lockheed Martin (NYSE: LMT), of Bethesda, Maryland, is a defense and aerospace company that resulted from a 1995 combination between Lockheed Corporation and Martin Marietta Materials, Inc. In its current form, Lockheed Martin focuses on defense, space, intelligence, homeland security and information technology. LMT is another Citi Research buy.

The company’s key business segments are Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. Lockheed Martin’s management recently laid out the case that margins are likely to trough in 2024 and drift toward 11%-plus over time, driven largely by product mix.

The loss-making classified contract at Lockheed Martin’s MFC business will be a tailwind in 2025, i.e., lower forward loss charges, while the rest of the margin accretive MFC portfolio is likely to grow faster than the remainder of the company. Further, new awards across the company better reflect the current cost environment and should produce margins higher than pre-pandemic backlog, according to a Citi Research note.

Chart courtesy of www.stockcharts.com

“Defense will continue to be a big business,” said Michelle Connell, who heads Portia Capital Managment in Dallas. Connell is recommending Lockheed as a buy and the President’s May 20 announcement about the golden dome is one of her reasons.

According to the Stockholm International Peace Research Institute, (SIPRI), 2024 world military expenditures reached $2718 billion. That’s an increase of 9.4% from 2023 and the largest year-over-year increase since the end of the Cold War. Military spending is increasing globally, but most especially in Europe and the Middle East.

For context, for the current year, the United States has budgeted $895 billion. Second is China with $267 billion, while third is Russia with $126 billion.

Given the backdrop, investing in the defense sector has a high probability that it will continue to be profitable, Connell said. This year, LMT made it clear it will target increasing its growth in Europe, she added.

“The company is well known for its F-35 aircraft and LMT’s management is confident that they will be able to deliver its 2025 goals for this product line,” Connell told me. “When Trump signed his recent $142 billion deal with Saudi Arabia, F-35s were not mentioned. It will be interesting to see how this develops.”

While LMT recently lost its F47 contract to Boeing, management has stated that they believe that this revenue will be made up elsewhere, Connell said.

Michelle Connell heads Portia Capital Management

Huntington Beach, California-based Karman (NYSE: KRMN) reported strong first-quarter results, coupled with impressive revenue visibility (95% of 2025 guided-revenue covered), as well as a strong book-to-bill (>1.5x) to provide reassurance that supports the company’s long-term fundamental story, wrote Timothy Horan, an equity research analyst with Oppenheimer. The company is positioned in three of the fastest growing end markets in defense (strategic missiles/nuclear deterrence, tactical missiles and space), aligning with key priorities of the Pentagon.

“Furthermore, the company is poised to be a contributor with its unique IP in incremental defense initiatives, e.g. the golden dome, supporting its defense prime customers. He recently raised his target price on Karman to $46.50 and maintains a Buy rating. He added:

Key Takeaways from the Quarter — Karman reported a strong first quarter with revenues, adjusted EBITDA and adjusted EPS outpacing consensus estimates. On a GAAP-basis, the company reported a net loss due to one-time expenses that arose during the IPO transaction process. The company re-affirmed its full-year guide and noted it has backlog visibility to 95% of its 2025-guided revenues as of the end of April and expects full-year coverage to be achieved sometime in the second quarter.

Key Debates — 1) The outlook for defense spending given apparent efforts in the United States to re-shape the geopolitical environment and the broader U.S. government. In our view, nuclear deterrence, tactical missiles and space are likely protected areas of the budget, which fall in-line with 17 priorities from the Pentagon. 2) The resilience of KRMN’s EBITDA margins in a “DOGE world” that is focused on costs and efficiency. In our view, margins levels are defendable to the extent the company’s solutions drive down costs for customers, and by extension the government.

Potential Catalysts — 1) Award activity on new platforms and the expansion of content on existing ones; 2) M&A activity that adds capability sets that could drive new awards and/or shipset content growth and 3) more details on the U.S. missile defense dome proposed by the president, which could lead to more work for the company over time given its positioning across missiles and space.

Model and Price Target Changes — Given the company’s strong demand visibility in conjunction with its positioning in three of the fastest growing end markets, we raise our revenue outlook for 2025-27, which flow through to our adj. EBITDA and adj. EPS estimates. As a result, we raise our target price to $46.50 from $42, which is derived at 29x our 2027 adj. EBITDA numbers. Maintain Buy.

Chart courtesy of www.stockcharts.com

Geopolitical Risk

Gold prices fell on Tuesday, May 20, amid optimism about a potential ceasefire between Russia and Ukraine, after President Trump announced both countries had agreed to begin negotiations “immediately.” A large prisoner exchange was arranged between the two countries, but no ceasefire agreement has been reached and the war is continuing to rage.

An encouraging sign arose with China on May 14. At that date, the White House announced the United States and China committed to take the following actions:

America would modify the application of the additional ad valorem rate of duty on articles of China (including articles of the Hong Kong Special Administrative Region and the Macau Special Administrative Region) set forth in Executive Order 14257 on April 2, 2025, by suspending 24 percentage points of that rate for an initial period of 90 days. The United States retained a remaining ad valorem rate of 10% on those articles pursuant to the terms of said Order; and (ii) removing the modified additional ad valorem rates of duty on those articles imposed by Executive Order 14259 of April 8, 2025, and Executive Order 14266 of April 9, 2025.

The four dividend-paying defense stocks may shine amid the plan to build a Golden Dome to protect the United States and possibly Canada from missile attacks. Investors who are willing to risk uncertainty of whether the plan will succeed amid fiscal pressure could end up profiting sooner or later.