Both Lockheed Martin (NYSE: LMT) and RTX (NYSE: RTX) raised their dividends in 2026, making this a genuinely competitive matchup for income-focused investors.
Each company carries a massive order backlog, generates serious free cash flow, and benefits directly from the global rearmament cycle currently driving defense spending higher.
Only one of them, however, earns the title of better retirement income buy when the full picture is examined carefully.
On raw yield, Lockheed Martin pays a quarterly dividend of $3.45 per share, translating to an annualized forward payout of $13.80 per share against a current price of $534.50.
RTX pays $0.73 per share quarterly, with an annualized forward payout of $2.92 per share against a current price of $193.77, giving Lockheed a meaningfully higher starting yield for income investors buying today.
Dividend growth also favors Lockheed, whose quarterly progression moved from $3.00 in 2023 to $3.15, then $3.30, and now $3.45, extending the company’s streak to 23 consecutive years of dividend increases.
RTX has maintained a steady mid-single-digit cadence, moving its quarterly payout from $0.59 in 2024 to $0.63, then $0.68, and now $0.73, though a clean multi-decade streak is complicated by a 40.58 restructuring entry around the 2020 merger.
When it comes to dividend durability and coverage, RTX presents a stronger case, generating $2.88 billion of free cash flow in Q2 2026 and raising full-year FCF guidance to a range of $8.50 billion to $8.75 billion.
Lockheed produced $2.92 billion of Q2 free cash flow but carries full-year guidance of only $7.0 billion to $7.2 billion, and its Q1 2026 free cash flow was negative $291 million partly due to F-16 charges of $125 million.
F-35 deliveries falling to 19 from 50 year over year in Q2 highlight how concentrated Lockheed’s revenue base remains around a handful of very large government programs.
RTX benefits from meaningful diversification across Collins Aerospace, Pratt and Whitney, and Raytheon, with commercial aftermarket revenue up 25% at Pratt providing a cushion that pure-play defense contractors simply cannot match.
RTX’s backlog stands at $289 billion, up 22% year over year, compared to Lockheed’s $230.42 billion, with Raytheon’s backlog nearly half international, spreading geopolitical risk more broadly.
Pratt and Whitney’s powder metal matter remains a real cost headwind, but compensation of roughly $150 million in Q2 suggests the exposure is bounded rather than open-ended.
Despite RTX’s more diversified cash engine, the overall verdict for retirement-focused income investors goes to Lockheed Martin, which returned $796 million to shareholders through dividends in the second quarter alone.
Retirees prioritizing the larger, steadier income stream today will find LMT delivers on yield and dividend history, while investors more focused on long-term payout safety may reasonably prefer RTX’s hybrid commercial-defense model.
