Best Defense Stocks To Invest in 2025

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The defense sector often sees steady demand as the U.S. and other nations upgrade equipment to stay secure. With today’s geopolitical tensions and economic uncertainty, defense stocks could gain even more traction — especially as global pressure points risk escalating into conflicts.

Key Takeaways

• The demand for defense companies’ products and services is steady and might be poised for growth.
• Investors can invest in individual stocks or diversify with defense exchange-traded funds (ETFs).
• Geopolitical conditions, U.S. budget priorities and market conditions can trigger volatility, so research stocks carefully before you buy.

Top 5 Defense Stocks To Watch in 2025

These defense stocks may be ones to follow in the months ahead.

1. Boeing Co. (BA)

• Price: $215.02
• Market cap: $162.59 billion 
• Dividend yield: N/A

Boeing Co. develops and services commercial and military aircraft, defense products and space systems, with customers in over 150 countries. The company’s jets — including the 737, 747, 767, 777 and 787 families — make up nearly half the world’s commercial fleet.

Boeing has faced major setbacks in recent years, from two 737 Max crashes in 2018 and 2019 to ongoing quality issues like the 2024 Alaska Airlines door plug failure. Even so, analysts remain optimistic — 20 out of 26 rate the stock a “buy” or “strong buy.” It has an average price target of $252.39, about 17% above current levels.

2. Lockheed Martin Corp. (LMT)

• Price: $474.32
• Market cap: $110.74 billion
• Dividend yield: 2.78%

Lockheed Martin Corp. is a leading security and aerospace company producing everything from commercial and military aircraft to autonomous systems, missile defense products and radar technology. The company operates out of more than 350 facilities worldwide and employs 121,000 people — 20% of whom are veterans.

Analysts expect only a modest 12-month gain of about 1.10%, but the stock continues to offer a solid dividend yield for investors.

3. General Dynamics Corp. (GD)

• Price: $326.40
• Market cap: $87.8 billion
• Dividend yield: 1.84%

General Dynamics Corp. is a global defense and aerospace company offering products and services in business aviation, shipbuilding and repair, weapons systems and technology solutions. The company employs about 117,000 people around the world.

Of the 21 analysts tracking the stock, nine rate it a “buy.” The average price target sits at $338.94 — nearly 4% above current levels. Coupled with the stock’s dividend, the total 12-month return could approach almost 6%.

4. RTX Corp. (RTX)

• Price: $158.58
• Market cap: $212.27 billion
• Dividend yield: 1.72%

RTX Corp. was created when Raytheon Co. merged with United Technologies Corp. in 2020. Now the company operates three divisions: Collins Aerospace, Pratt & Whitney and Raytheon. It officially changed its name to RTX Corp. in July 2023.

RTX has been a stellar pick for investors, outperforming the S&P 500 over the YTD, 1-year, 3-year and 5-year periods. Analysts also expect more growth ahead. Of the 20 covering the company, 13 rate it a “buy,” with an average price target about 4% above current levels.

5. Northrop Grumman Corp. (NOC)

• Price: $579.36
• Market cap: $82.95 billion
• Dividend yield: 1.59%

Northrop Grumman Corp. builds advanced aircraft like the B-2 Spirit stealth bomber, provides cyber defense for military communications, develops naval systems, supports space exploration and more. The company employs 100,000 people across all 50 states and in over 25 countries around the world.

The stock has outperformed the S&P 500 over multiple time periods, though it may be a bit richly valued at the moment. Ten of the 21 analysts following the stock have a “buy” or “strong buy” rating on the stock, with an average price target of $606.63.

4 Defense ETFs for Diversification

If you want to invest in aerospace and defense stocks but don’t want to choose a single company to invest in, you can buy an ETF that will mimic the return of the defense sector overall. Here are four of the largest defense ETFs:

1. iShares U.S. Aerospace & Defense ETF (ITA)

• Net assets: $9.18 billion
• Annual dividend yield: 0.54%
• Expense ratio: 0.38%
• YTD performance: 39.26%

The iShares U.S. Aerospace & Defense ETF is a growth fund that tracks the Dow Jones U.S. Select Aerospace & Defense Index.

2. Invesco Aerospace & Defense ETF (PPA)

• Net assets: $6.34 billion
• Annual dividend yield: 0.43%
• Expense ratio: 0.58%
• YTD performance: 31.30%

The Invesco Aerospace & Defense ETF tracks the SPADE Defense Index. It’s a blended fund, meaning it invests in a mix of growth and value stocks.

3. SPDR S&P Aerospace & Defense ETF (XAR)

• Net assets: $4.06 billion
• Annual dividend yield: 0.49%
• Expense ratio: 0.35%
• YTD performance: 35.64%

The SPDR S&P Aerospace & Defense ETF is a blended fund that tracks the S&P Aerospace & Defense Select Industry Index.

4. Global X Defense Tech ETF (SHLD)

• Net assets: $3.73 billion
• Annual dividend yield: 0.38%
• Expense ratio: 0.50%
• YTD performance: 78.96%

The Global X Defense Tech ETF tracks the Global X Defense Tech Index.

Should You Invest in Defense Stocks? Pros and Cons To Weigh

The defense industry is unique in the American market. Here are some of its major attractions for investors, plus a look at potential drawbacks:

Before You Buy: Defense Stock Risks To Know

Here are a few factors that could impact your returns:

• Defense stocks may lag during overall market booms.
• Companies in the industry have grown more slowly compared to other sectors.
• Defense companies can be affected by changes in government policy.

Trends Shaping the Defense Industry in 2025

Analysts expect several factors to drive defense stocks in the coming year:

• Rising geopolitical tensions: Major global conflicts are continuing in 2025, including wars between Ukraine and Russia and Israel and Hamas. All of these factors contribute to rising defense spending.
• Bigger U.S. military budget: The Trump Administration plans to raise the defense budget to $1 trillion in 2026 — a major boost for contractors.
• Market uncertainty: Shifting tariff policies have investors viewing defense stocks as a safer bet during economic volatility.

How To Buy Defense Stocks: 4-Step Guide

The process for buying stocks is the same regardless of the type you want to buy, and that includes defense stocks. Here are the steps you’ll need to take to invest in stocks:

1. Pick a broker: Stick with a zero-commission online broker that allows investors to trade fractional shares.
2. Do your research: At a bare minimum, you should understand the products the company makes, how it’s been performing and how it is valued.
3. Choose your investment amount: Avoid the temptation to put all your eggs in one basket.
4. Enter your order: Once you’ve done your research and picked the right investment, enter your order on your broker’s trading platform.

Karen Doyle and Daria Uhlig contributed to the reporting for this article.

Data is accurate as of Sept. 16, 2025, and is subject to change.

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