White House to Block Buybacks, Dividends for ‘Underperforming’ Defense Firms

Trump administration aims to boost production of equipment and weapons systems.

Zach Vasile

Friday, January 09, 2026 at 10:30 AM ET

Verified

Edited By:

Travis Tingle

F-35 in production [Credit: Angel DelCueto/Lockheed Martin]

Key Takeaways:

President Trump issued an executive order blocking underperforming defense contractors from conducting stock buybacks and paying "excessive" dividends.
The directive aims to prioritize military equipment production, innovation, and on-time delivery, addressing concerns about the speed and cost-effectiveness of U.S. weapons manufacturing.
The Defense Department is tasked with identifying non-compliant contractors, reworking existing contracts, and incorporating these restrictions into future agreements.
Trump specifically targeted Raytheon (now RTX) for its perceived underperformance and shareholder focus, leading to initial stock market volatility for defense firms as contractors seek legal guidance.

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In a move that could have major ramifications for the military aerospace industry, President Donald Trump said this week that he will block defense contractors from executing stock buybacks and “excessive” dividends if they underperform.

In an executive order issued Wednesday, the president slammed the defense sector for, in his view, prioritizing shareholders “at the cost of production capacity, innovation, and on-time delivery.”