Are U.S. defense contractors lavishing their investors too much?

The Trump administration’s executive order threatening to ban defense contractors from paying dividends or conducting stock buybacks signals a shift toward greater state intervention in the private defense sector. This policy stems from frustration over production delays for critical munitions like Tomahawk missiles, as officials argue that contractors prioritize shareholder returns over manufacturing capacity. However, industry experts like Stacey Pettyjohn point to the Pentagon’s own inconsistent purchasing patterns and long-term, non-competitive contracts as the primary drivers of industrial fragility. While the administration proposes a 50% defense budget increase to incentivize speed, investors like Shannon Sikosha warn that restricting capital returns could cause shareholders to flee, ultimately starving the industry of the very investment needed for modernization. This tension highlights a fundamental disagreement over whether the defense industry is failing to meet national security demands or is simply responding to the volatile economic signals of its only major customer.