3 Powerhouse Defense Stocks That Can't Be Ignored as Trump Ramps Up Iran War Spending

By Selena Maranjian – Apr 17, 2026 at 5:12PM ESTKey PointsLockheed Martin is the largest defense company, with diversified and lucrative operations.Northrup Grumman is also immense, specializing in, among other things, military drones.The iShares U.S. Aerospace & Defense ETF can quickly help you invest in 40-plus defense stocks.Wars aren't cheap. Thus, it may not surprise many people that President Donald Trump submitted his proposed 2027 budget this month, calling for a huge $500 billion increase for the Department of Defense. The proposed increase is to be partially offset by a 10% cut in non-defense spending. That would bring the sum allotted to the military to $1.5 trillion for the 2027 fiscal year. Whether the military has $1 trillion or $1.5 trillion to spend in 2027, it's likely that a lot of money will flow to defense companies -- in this year, next year, and beyond. Here, then, are several promising defense stocks to consider for your long-term portfolio. Image source: Getty Images. 1.

Lockheed Martin Lockheed Martin (LMT 2.52%), with a market cap of nearly $140 billion, is a major defense company. It's been around for more than 100 years (in one form or another) and employs more than 120,000 people around the globe. It rakes in around $20 billion annually from aeronautics, $14 billion from missiles and fire control, $17 billion from rotary and mission systems, and $13 billion from space projects. One reason you might consider the company for your portfolio is that it pays a dividend yielding 2.2%. That shareholder reward rises to 4.3% when you add in the effect of stock buybacks. Another reason for consideration is its massive contract backlog, which hit a record value of $194 billion at the end of 2025. Global unrest can result in increased orders for products such as the popular F-16 and F-35 fighter jets. For example, Greece is considering spending upwards of $4 billion on fighter jets from Lockheed. 2.

Northrup Grumman Northrup Grumman (NOC 1.12%), with a market cap of around $96 billion, notes that "As a national resource, our industry plays a critical role in supporting the warfighter to maintain global and economic stability and protect the security of America and its allies." The company employs more than 40,000 "mission-driven" engineers, and its operations include stealth bombers, nuclear missiles, and submarines, among other things. Its drones are another key product, including the MQ-4C Triton, which has an effective range of more than 8,000 nautical miles. It, too, is a dividend payer yielding 1.4%, and its total yield, including share repurchases, totals 3%. It has upped its payout annually for more than 20 years in a row, raising it by 11% in 2025. The company's fourth quarter featured revenue rising 10% year over year, and its backlog of orders also hit a new high of $96 billion. 3. iShares U.S. Aerospace & Defense ETF My last suggestion is not exactly a stock -- it's an exchange-traded fund (ETF), which trades like a stock: the iShares U.S. Aerospace & Defense ETF (ITA +1.27%). This fund is a great choice if you're not that skilled at assessing the promise of defense stocks and you don't know which ones will perform best going forward. Buy some shares of this ETF, and you'll quickly be a part-owner of more than 40 defense and aerospace stocks, including Lockheed Martin, Northrup Grumman, GE Aerospace, RTX, Rocket Lab, and more. The ETF has averaged annual gains of close to 16% over the past 10 and 25 years, and has averaged 28% over the past three years. If military spending increases, these two stocks and this ETF are likely to do well. Of course, no one knows exactly what will happen in the coming few years. Read NextApr 17, 2026 •By Manali Pradhan, CFAAs Trump Pushes a Bigger Iran War Budget, 3 Core Defense Holdings Stand Out for Patient InvestorsApr 16, 2026 •By Lou WhitemanBest Space Stocks to Buy in 2026 and How to Invest in ThemApr 16, 2026 •By Brett SchaferGot $7,500? 1 Defense Stock With the Backlog and Balance Sheet to Weather Any Trump‑Era Budget Swing.Apr 15, 2026 •By Lee SamahaDoes Trump's Record Defense Budget Make Lockheed Martin a "Never Sell" Stock?Apr 12, 2026 •By Rich SmithSpaceX Launches More Rockets Than Anyone Else in the World.

Here Is What That Means for Its IPOApr 8, 2026 •By Brett Schafer2 Defense Stocks Worth Buying as Global Tensions ContinueAbout the AuthorSelena Maranjian is a contributing personal finance and investing expert at The Motley Fool. Selena has produced The Motley Fool’s nationally syndicated newspaper feature since 1997. She is the author of The Motley Fool Money Guide and Investment Clubs: How to Start and Run One the Motley Fool Way, and the co-author of The Motley Fool Investment Guide for Teens and several editions of The Motley Fool Investment Tax Guide. Prior to The Motley Fool, she worked as a high school teacher and public opinion analyst. She holds a master’s degree in teaching from Brown University and a master’s degree in finance from the Wharton School of the University of Pennsylvania.TMFSelenaStocks MentionedLockheed MartinNYSE: LMT$592.19(-2.52%)-$15.30Northrop GrummanNYSE: NOC$665.26(-1.12%)-$7.51iShares Trust - iShares U.s. Aerospace & Defense ETFNYSEMKT: ITA$231.94(+1.27%)+$2.91*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.