Growth in Defense: Investing in U.S. Defense

The U.S. defense industry is a behemoth, both in terms of size, scale, value, and reach. Investing can often be a tricky business, with so many options available and uncertainty always looming around what seems like every corner. However, there is one sector that has a proven track record of being solid and secure for investors — U.S. defense companies. Investing in these companies can provide the security of bonds while also generating the growth of stocks. They have a long history of government contracts and are projected to secure even more. With the U.S. defense budget projected to be over $1 trillion annually by 2040, it seems like the foreseeable future of defense spending and investing is not expected to slow down anytime soon. A few of the biggest benefactors of this spending is Lockheed Martin, General Dynamics and Northrop Grumman. Here are a few perspectives to consider when looking to invest in US defense companies.

US Defense Growth

The U.S. defense industry has been growing exponentially over the years. These companies produce military equipment, provide critical services, and execute crucial defense systems for the United States. With the amount of investment the U.S. government plows into its military, it is no surprise that these companies are doing well. The U.S. government awarded approximately $381 billion in contracts to defense companies in 2019 alone. These contracts include the production of fighter jets, drones, missiles, and more.

The Big Three

In terms of revenue growth, one of the top defense companies is Lockheed Martin. As of 2021, their total revenue sits at $65.4 billion, which represents a growth of almost 8% since 2019. Lockheed Martin is also known for producing the F-35 Lightning II fighter jet, which is projected to bring in over $1 trillion in revenue over the next few decades. This high demand for their products makes it a great investment opportunity to say the least.

General Dynamics is another top defense company that should not be overlooked. It is a leader in producing submarines and armored vehicles for the U.S. Army. As of 2021, its revenue stood at $37.9 billion representing growth of about 5% since 2019. Based on its current military contracts, General Dynamics can expect revenue of over $100 billion over the next few years. The company has a market capitalization of over $50 billion and is definitely worth considering in your investment portfolio.

Another big name is Northrop Grumman, which specializes in missiles, military aircraft, electronics, and space systems. They have won massive contracts recently, including the $85 billion contract to build new intercontinental ballistic missiles. Based on 2021 data, Northrop Grumman’s total revenue stands at $33.8 billion, with a growth rate of 4.6% since 2019. Given their recent contract wins, they are expected to receive higher revenue during the next few years, making it an attractive investment.

Future Growth

The growth projection of the U.S. defense industry is also promising, with the U.S. defense budget expected to continue growing over the coming years. By 2040, it is expected that the U.S. military spending will reach over $1 trillion. Some predictions suggest it could be as high as $1.4 trillion annually at that point. Without going into the economical and budgetary factors that need to be considered with this level of spending, from an investment perspective alone, this is promising for those wishing to invest in these businesses. This provides ample opportunities for defense companies to win new contracts and reap greater investments.

Investing in the U.S. defense industry means profiting from their stock prices and consistent dividends. Since 2010, these defense companies’ stock prices have increased by an average of more than 400%. According to analysts, the projected stock price of Lockheed Martin, General Dynamics, and Northrop Grumman continues to grow, making a potential investment even more enticing.

Investing in U.S. defense companies could be the perfect opportunity for those looking to balance security and growth with their investment strategies. With the U.S. government continuing to plow vast sums of money into its defense budget, reputable companies such as Lockheed Martin, General Dynamics, and Northrop Grumman are set to profit significantly. As mentioned earlier, the growth projection of the U.S. defense industry continues to look excellent from an investment point of view, with massive numbers of contracts being awarded each year, and the U.S. military budget set to surge to over $1 trillion by 2040. Ultimately, the growth of the defense industry and the strong performance of these three top defense companies make them great investment opportunities for those seeking a less risky, secure investment. Even with all the macro and micro concerns, it has historically been a safe position to bet on America. The foreseeable future paints that same picture. Focus on the future and try to look past all the extra static and noise that comes out of media on a daily basis. Happy investing!

This is not financial advice. For educational purposes only. Before making any financial decisions, consult with a professional.