The U.S. Defense Department moved on July 27 to address critical missile defense shortfalls by announcing two seven-year agreements tied to ongoing Iran tensions.
The contracts were awarded to L3Harris Technologies (LHX) and Lockheed Martin (LMT) to expand propulsion capacity for Patriot and Terminal High Altitude Area Defense interceptors.
The deals are designed to close a persistent shortage of missile defense systems that has drawn increasing concern from Pentagon planners and defense analysts.
RTX (RTX), through its Raytheon segment, also stands to benefit as a key contractor and supplier of both the Patriot and THAAD interceptor systems.
Lockheed Martin serves as the prime contractor and system integrator responsible for manufacturing the overall THAAD system and its hit-to-kill interceptor missiles.
RTX functions as the main system architect and radar provider for the Patriot system, generating high-margin, long-term recurring revenue through U.S. and international military sales, maintenance contracts, software retrofits, and next-generation radar upgrades.
Driven by rising demand to replenish depleted global missile inventories, RTX holds a record backlog of $289 billion through the second quarter of 2026.
All three defense stocks have posted gains so far this year, though their performances have varied notably across the group.
L3Harris is up roughly 3% on the year, while RTX and Lockheed Martin have surged more than 17% and 19%, respectively, outpacing their peer by a wide margin.
L3Harris continues to convert record order flow into an expanding backlog of $42 billion, while aggressive cost initiatives and asset sales are supporting debt reduction and accelerating earnings per share.
The company also offers a dividend yield of 1.61% at its current share price and raised its dividend by 4% this year, marking the 25th consecutive annual increase.
Each of the three companies provides above-average dividend income alongside their exposure to what analysts expect to be a prolonged cycle of elevated defense spending.
With global missile inventories strained and government contracts extending across multi-year horizons, the momentum behind LMT, RTX, and LHX appears unlikely to fade in the near term.
