In recent years, top defense contractors — backed by trillions in taxpayer dollars — have prioritized enriching shareholders over expanding production. As war spending surges, America’s biggest weapons manufacturers could funnel even more to investors.
In the weeks before launching strikes in Iran, the Trump administration had a problem: figuring out how to spend the $500 billion in extra Pentagon money the White House plans to request from Congress next year. Just two days later, the administration told Congress that in the next year alone, it plans to burn through $153 billion in additional military funding approved in 2025 — money Congress expected to be spent over five years.
Now, less than a week after the strikes, executives representing weapons manufacturers including RTX (formerly Raytheon) and Lockheed Martin are scheduled to meet with President Donald Trump to discuss the nation’s “diminishing” munitions stockpiles.
While the president insists US munitions reserves have “never been higher or better,” defense industry–funded consultants and lobbyists are warning that in less than a week, the United States has “burn[ed]” through its precision-guided long-range missile reserves. They argue that a shrinking industrial base and declining productivity could undermine US military objectives in places like Ukraine and Israel. Of particular concern are the country’s stockpile of precision missile interceptors, a quarter of which were reportedly depleted in just twelve days of fighting between Israel and Iran last summer and are on track to be further drained in the Iran war.
Yet, since the 1990s, US military spending has nearly doubled, exceeding the combined spending of the next nine largest militaries.
So where has all that money gone? Into the pockets of top shareholders.
The weapons industry has become incredibly concentrated. Since the 1990s, the number of “prime” contractors working with the Defense Department has shrunk from fifty-one to five. And in recent years, these giants — propped up by trillions in taxpayer spending — have spent more enriching investors than in expanding production.
Between 2020 and 2025, top military contractors spent $110 billion on buybacks and dividends — more than double what they spent on capital expenditures. Those payouts disproportionately benefit the wealthiest Americans. The top 1 percent of earners control roughly half of all wealth invested in the stock market — including executives and board members who approve buybacks and dividends while enjoying lucrative stock-based compensation.
It may be fortunate that those billions weren’t instead spent on war munitions designed to cause death and destruction. But much of this money ultimately came from American taxpayers, who are likely to end up footing the bill to replenish US arsenals.
The four largest defense firms in the nation all heavily rely on federal contracts, meaning weapons-industry investors are indirectly lining their pockets with taxpayer dollars. According to the government contract tracker TenderAlpha, in 2024, Department of Defense contracts accounted for between 30 and 40 percent of Boeing and RTX’s revenue, 74 percent of Lockheed Martin’s, and a startling 98 percent of Booz Allen Hamilton’s.
There are already indications that plenty more tax dollars could be flowing their way. The White House is reportedly planning to ask Congress for another $50 billion in military funding as soon as Friday, a proposal more likely to be approved now that Republicans have torpedoed Democrats’ lobbyist-compromised effort to limit the Iran war.
It’s no wonder that on the Monday following the Iran strikes, Pentagon suppliers saw immediate returns. Responsible Statescraft reports that Lockheed Martin (for which annual defense contracts rival the budget of the entire US State Department) experienced a 3.4 percent stock jump; RTX rose 4.7 percent; and Northrop Grumman posted a 6 percent increase.
Morgan Stanley even issued an advisory this week recommending that investors “consider increasing exposure around themes like defense, security, aerospace and industrial resilience, where government spending can drive multiyear demand.”
The industry’s racket has become so extreme that earlier this year, Trump issued an executive order barring defense contractors from committing cash to buybacks and dividends if they fail to “produce a superior product, on time and on budget.” He even went so far as to threaten to cancel the federal contracts of RTX — which redistributed $57 billion to investors between 2015 and 2025 — until it ended stock buybacks and instead invested in manufacturing.
“Defense Contractors are currently issuing massive Dividends to their Shareholders and massive Stock Buybacks, at the expense and detriment of investing in Plants and Equipment,” the president wrote on Truth Social in January. “Executive Pay Packages in the Defense Industry are exorbitant and unjustifiable given how slowly these Companies are delivering vital Equipment to our Military, and our Allies.”
In response, firms including Lockheed Martin and L3Harris agreed to increase their capital expenditures by 38 percent from 2025 and pause buybacks — but have no plans to roll back quarterly dividends. And with bombs now falling on Tehran, these concerns seem likely to fall by the wayside.
This article was first published by the Lever, an award-winning independent investigative newsroom.