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Trump Calls for Halt to Defense Stock Buybacks

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  Published in Media and Entertainment on Saturday, January 31st 2026 at 5:52 GMT by moneycontrol.com
      Locales: N/A, UNITED STATES

Manchester, NH - January 31st, 2026 - Former President Donald Trump ignited a fresh debate regarding the priorities of America's defense industry during a rally in New Hampshire yesterday, calling for a halt to stock buybacks and dividend payments by major defense contractors. Trump argued that these funds should be reinvested directly into modernizing the U.S. military, which he characterized as being in a state of "serious deterioration."

The former president's remarks, delivered to a receptive crowd, represent a potentially significant shift in his approach to defense spending. While traditionally advocating for increased military budgets, this latest pronouncement focuses not just on how much is spent, but where the money goes within the existing financial structure of defense firms. He stated he would "force" companies to prioritize equipment purchases and technological innovation over shareholder returns.

Trump specifically cited concerns about the lagging pace of military modernization, implicitly criticizing defense companies for prioritizing short-term profits over long-term national security interests. He pointed to perceived weaknesses in key areas of defense, though he refrained from outlining specific deficiencies, fueling speculation about which aspects of the military he believes require the most urgent attention. Sources close to the former president have suggested a particular focus on countering advancements in hypersonic missile technology by nations like China and Russia, and bolstering cybersecurity capabilities.

Key defense contractors likely to be affected by such a directive include industry giants Lockheed Martin, Boeing, RTX (formerly Raytheon Technologies), and General Dynamics. These companies collectively represent a substantial portion of the U.S. defense budget and have consistently engaged in stock buyback programs and dividend payouts, rewarding shareholders with profits generated from government contracts. In 2025, these four companies alone returned over $35 billion to shareholders through buybacks and dividends, a figure that would potentially be available for reinvestment under Trump's proposed policy.

The feasibility of implementing such a demand is already drawing scrutiny from legal and economic experts. While the government can exert influence through contract negotiations and regulatory oversight, directly forcing private companies to alter their financial practices faces significant legal hurdles. Some legal scholars point to the potential for arguments based on the Takings Clause of the Fifth Amendment, which protects private property rights.

"The idea of compelling a company to forgo legal shareholder returns raises serious constitutional questions," explains Professor Eleanor Vance, a constitutional law expert at Georgetown University. "The government could attempt to tie funding to specific investment requirements, but a blanket prohibition on buybacks and dividends would likely be challenged in court."

The economic impact is equally complex. While reinvestment in military modernization could stimulate innovation and job creation within the defense sector, a sudden halt to buybacks and dividends could negatively impact stock prices and investor confidence. Some analysts suggest it could also discourage investment in defense stocks, potentially hindering long-term growth.

Furthermore, critics argue that companies are already incentivized to innovate to maintain their competitive edge and secure future contracts. They point to substantial R&D spending by these same firms as evidence of their commitment to technological advancement. However, supporters of Trump's proposal contend that the current level of investment is insufficient to address the rapidly evolving threat landscape and that a more forceful approach is necessary.

The debate also raises broader questions about the relationship between the defense industry, the government, and shareholders. For decades, the U.S. defense industry has operated under a model that prioritizes shareholder value alongside national security. Trump's proposal suggests a willingness to fundamentally disrupt this dynamic, potentially ushering in an era of greater government control over the allocation of resources within the defense sector.

The reaction from defense industry leaders has been muted thus far, with most companies declining to comment directly on Trump's remarks. However, sources within these organizations indicate growing concern about the potential implications of his policy proposal, particularly if he were to be re-elected in November. The next few months will likely see intense lobbying efforts as the industry attempts to shape the debate and mitigate the potential risks posed by Trump's call for a shift in priorities.