Trump’s Dividend Drama: Is This a Buyback Backfire?

by

Okay, so the President has decided he doesn’t like dividends. It’s like finding out your accountant moonlights as a mime – unexpected, and honestly, a little unsettling. He’s fixated on defense contractors showering shareholders with cash while, apparently, the gears of freedom aren’t being sufficiently greased. This isn’t a policy proposal; it’s a Truth Social rant with potentially massive implications for your portfolio.

The core complaint? These companies are prioritizing stock buybacks and dividends over, and I quote, “Plants and Equipment.” It’s the kind of statement that makes you wonder if someone accidentally left a 1950s industrial policy pamphlet on his desk. He’s threatening to cap executive pay at $5 million – which, let’s be real, is still enough to buy a small island – and ban dividends and buybacks until everyone behaves. It’s a bold move, like trying to negotiate with a toddler over a Lego castle.

He’s dangling a $1.5 trillion defense budget increase as a carrot, which is…a lot of carrots. The message is clear: take the money, but spend it on, like, actual stuff, not just making the stock price go up. It’s a classic good cop/bad cop routine, except the “good cop” is offering you a bazillion dollars and the “bad cop” is threatening to revoke your dividend checks.

What Does This Actually Mean?

So, he signed an executive order. Which, in Washington, is roughly equivalent to sending a strongly worded email. It directs Defense Secretary Pete Hegseth to identify the worst offenders – the companies that are allegedly prioritizing shareholder enrichment over national security. Think of it as a corporate performance review, but with the potential for actual consequences.

The process is delightfully bureaucratic. First, Hegseth has to identify the problem. Then, he has to give these companies 15 days to explain themselves. It’s like a DMV hearing, but for multi-billion dollar defense contractors. If they don’t respond, or their response is deemed insufficient, Hegseth can renegotiate contracts or, get this, invoke the Defense Production Act. Apparently, the government can now tell companies what to do, which is…novel.

Future contracts will reportedly include clauses banning dividends and buybacks if companies don’t play ball. It’s a preemptive strike against shareholder value, which is…aggressive. Honestly, it feels like someone finally decided to apply some basic venture capital principles to the military-industrial complex.

Are Dividends Officially Doomed?

As of today, no specific companies have been publicly shamed. But let’s be real, some are more vulnerable than others. I’ve been tracking ten of the biggest players, and a few are definitely sweating.

Company Dividend Yield Buybacks YTD (in Billions)
Lockheed Martin (LMT 0.52%) 2.3% $2.4
General Dynamics (GD 0.70%) 1.6% $0.6
L3Harris Technologies (LHX 0.29%) 1.4% $1
Northrop Grumman (NOC +0.37%) 1.3% $1
RTX (RTX 0.21%) 1.3% $0.1
Huntington Ingalls (HII 1.31%) 1.3% –
Leidos Holdings (LDOS 1.15%) 0.8% $0.6
Textron (TXT 1.07%) 0.1% $0.6
Boeing (BA +0.29%) – *
Kratos Defense & Security Solutions – *

The average dividend yield across these companies is only 1%, which, let’s be honest, isn’t exactly a fortune. But Lockheed Martin and L3Harris are the biggest spenders on buybacks, making them prime targets for a presidential smackdown. If Trump wants to make an example of someone, these are the companies most likely to feel the burn.

Look, this whole thing is a bit of a mess. But it’s also a fascinating case study in shareholder activism…with a distinctly Trumpian twist. The bottom line? Keep an eye on those buybacks. And maybe start investing in companies that actually make things. It’s a radical idea, I know.

Read More

2026-01-24 14:04