RTX (NYSE: RTX) and Lockheed Martin (NYSE: LMT) both offer defense investors steady dividend income, but the two payouts are built on very different foundations.
Lockheed pays an annualized $13.80 per share while RTX pays $2.92, a gap that sounds decisive until you account for the difference in share prices near $514.25 and $187.19 respectively.
Lockheed’s quarterly dividend stands at $3.45, up from $3.30 before its latest raise, translating to a yield of 2.63% backed by 23 consecutive years of increases.
RTX pays $0.73 per quarter, up from $0.68, producing a trailing yield of 1.46%, with management describing it on its July earnings call as “a commitment to the dividend, for sure.”
For investors drawing income today, Lockheed wins on yield and trades at a cheaper forward price-to-earnings multiple of 16 compared to RTX’s 25.
Lockheed’s backlog hit a record $230.42 billion following a $35 billion THAAD interceptor contract, but execution risk is a real concern investors cannot ignore right now.
First-quarter operating cash flow at Lockheed fell to just $220 million against $816 million in dividends paid, with free cash flow running negative $291 million and $950 million in classified program reach-forward losses carried into 2025.
RTX’s backlog reached $289 billion, up 22%, with 48% of Raytheon’s backlog coming from international customers, providing meaningful diversification away from Congressional budget cycles.
RTX guides 2026 free cash flow to between $8.50 billion and $8.75 billion, compared to Lockheed’s guidance of $7.0 billion to $7.2 billion, while commercial aftermarket sales rose 18% last quarter.
RTX posted its fifth consecutive quarter beating consensus estimates, expanded margins across all three of its divisions, and generates cash from two independent business drivers rather than one.
Lockheed’s cash flow swings sharply with program charges, and F-35 deliveries fell to 19 from 50 year over year in the most recent quarter, adding further near-term uncertainty.
The Department of War requested $1.45 trillion for fiscal 2027 versus $1.009 trillion enacted for fiscal 2026, a potential tailwind for both companies, though Congress determines the final appropriation.
RTX’s comparable dividend history begins in 2020 following the combination of Raytheon and United Technologies and the subsequent separations of Otis and Carrier, making a long-run streak comparison with Lockheed difficult.
Lockheed’s annual dividend spending grew from $2.347 billion in 2018 to $3.131 billion in 2025, while RTX paid $3.574 billion in dividends during 2025, reflecting its larger and faster-growing cash generation.
The verdict depends entirely on investor profile, with Lockheed suiting income-focused retirees who want higher yield at a cheaper multiple and can tolerate quarterly cash flow volatility.
RTX wins for investors with a decade-long horizon who prize a payout funded by broader, more diversified, and faster-growing free cash flow across defense and commercial aviation.
Both third-quarter earnings reports will serve as a critical test, particularly whether Lockheed can deliver full-year free cash flow within its $7.0 billion to $7.2 billion guidance range without new reach-forward charges.
