Following the Money: Here Are America's Top 10 Defense Contractors From high-tech fighter jets to mini-aircraft carriers, these contractors have got you covered. Image source: Lockheed Martin.
10. SAIC / Leidos Last year, SAIC and BAE Systems were awarded contracts to build an Amphibious Combat Vehicle 1.1 for the Marine Corps. Image source: BAE Systems. Let’s start off with a two-fer. Up until September 2013, SAIC and Leidos were one single company. By 2014, they had split, but were still working on contracts they’d previously won. Together or apart, they earned $3.6 billion from defense contracts in 2014 -- or about 1.25% of all defense contracts for the year.
9. Huntington Ingalls Industries Inc. Huntington Ingalls is building the Navy’s newest aircraft carrier, the USS John F. Kennedy. Image source: Huntington Ingalls. One of America’s two biggest military shipbuilders, Huntington Ingalls builds cutters for the U.S. Coast Guard -- and the Navy’s biggest supercarriers, too. In 2014, Huntington accounted for more than $4 billion in defense spending --1.4% of the total.
8. BAE Systems plc Co-located at the U.S. Navy’s Pearl Harbor Naval Shipyard, BAE’s Hawaii Ship Repair facility is one of the largest private sector ship repair facilities in the world. Image source: BAE Systems. The only non-American contractor on the list of the top 10 companies supplying American defense (indeed, the only one in the top 20), BAE does most of its business here through U.S. subsidiary BAE Systems, Inc. How much business does it do? About $4.9 billion in 2014 -- 1.7% of all defense spending.
7. L-3 Communications Holdings Inc. Image source: L-3 Communications. One of Washington’s favorite IT specialists, L-3 won $5.3 billion worth of defense work in 2014. That was nearly 1.9% of all funds the U.S. spent on defense contracting that year.
6. United Technologies Corporation Built by Lockheed, powered by Pratt & Whitney: the F-35. Image source: United Technologies. With $22 billion in revenue contributed by subsidiaries Sikorsky and Pratt & Whitney annually, and another $14.5 billion from its aerospace systems business, United Tech is one of the biggest names in aerospace. It’s also a huge supplier to the Pentagon, winning $6.2 billion in military contracts in 2014.
5. Northrop Grumman Corporation Global Hawk. Image source: Northrop Grumman. With products ranging from Global Hawk and Fire Scout drones to E-2D Advanced Hawkeye airborne early warning systems and B-2 bombers (and soon, perhaps the B-3 as well?), Northrop Grumman is one of America’s go-to sources for military contracting. 2014 saw Northrop take fifth place in defense contracting, winning $9.3 billion in work -- 3.25% of the total.
4. Raytheon Company Patriot missile battery. Image source: Raytheon. Certified rocket-stock Raytheon did even better, pulling down $11.9 billion in contracts in 2014. Probably best known for its Patriot missile defense system, Raytheon makes missiles for pretty much any platform you can imagine, from airplanes (AMRAAM) to ships (Seasparrow) to soldiers’ shoulders (Stinger).
3. General Dynamics Corporation M1 Abrams main battle tank. Image source: U.S. Air Force. The biggest name in American armored vehicles, General Dynamics builds both the Stryker armored personnel carrier and the heavier Abrams main battle tank. General Dynamics also builds guided missile destroyers, littoral combat ships, and nuclear attack submarines for the U.S. Navy. Combined, General Dynamics’ multiple military businesses brought in $13.6 billion in 2014.
2. The Boeing Company F/A-18 fighter on deck. Image source: Mass Communication Specialist 3rd Class Jason Johnston for the U.S. Navy. Ascending into the big leagues now, the No. 2 defense contractor in America is Boeing. The world’s biggest civilian plane builder also builds military jets for the Pentagon -- everything from F-15 fighter jets for the Air Force to P-8A Poseidons and F/A-18s for the Navy. Total defense haul in 2014: $18.2 billion.
1. Lockheed Martin Corporation F-35. Image source: John E. Wilson for the U.S. Marine Corps. And the nation’s top defense contractor? With $25.3 billion in contracts, that’s Lockheed Martin. Lockheed builds all of America’s fifth-generation fighter jets, both F-22 Raptors and F-35 Lightning IIs. In 2015, Lockheed Martin also bought Sikorsky -- instantly transforming it into the nation’s leading manufacturer of combat helicopters as well. Long story short, Lockheed’s going to be leading this top 10 list for quite some time to come.
So why is all this important? Wouldn’t you like to get in on that? Boeing and Lockheed Martin are America’s top two defense contractors. They’ve held these positions for each of the past three years, with no end in sight. And every time the government spends $1.00 of your tax money on private contracting, $0.16 to $0.18 of that goes to Boeing and Lockheed Martin.
You can! As a group, they pay an average of 2.4% in dividends every year. That’s several times more interest than your bank pays you. Boeing shares cost only 18 times earnings, and pay a 2.5% dividend yield. Lockheed Martin (with shares costing 19 times earnings) pays shareholders an even more generous 3%. In fact, each one of America’s top 10 (or 11) government contractors has a publicly traded stock that you can own.
So what are you waiting for? Tax time is just around the corner. If you want to take the sting out of paying the piper, pick up a few shares of one of these stocks. When your tax bill arrives in the mail, take comfort in the knowledge … Your dividend check won’t be far behind. Image source: Wikimedia Commons.
The next billion-dollar iSecret The world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early-in-the-know investors! To be one of them, just click here.