Lockheed Martin vs. RTX: Which Defense Dividend Is the Better Income Buy

Quick Read

• LMT wins on yield ($13.80 annualized) and 23 consecutive years of dividend hikes, making it the stronger income pick for retirees today.

• RTX’s $8.5B+ FCF guidance and $289B backlog give it superior dividend durability, cushioned by 25% commercial aftermarket growth at Pratt & Whitney.

• F-35 deliveries collapsed from 50 to 19 year-over-year, exposing Lockheed’s concentrated program risk and negative Q1 free cash flow.

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For a retirement-focused investor choosing between Lockheed Martin (NYSE:LMT) and RTX (NYSE:RTX), the question is direct: which defense prime is the better dividend to hold right now? Both are riding a rearmament cycle, both raised their payouts in 2026, and both generate the kind of free cash flow income investors want to see. Only one, though, earns the paycheck.

Round 1: Current Yield and Raw Income

Lockheed Martin pays a quarterly dividend of $3.45 per share, giving an annualized forward payout of $13.80 per share. RTX pays $0.73 per share quarterly, with an annualized forward payout of $2.92 per share. Against LMT’s current price of $534.50 and RTX’s $193.77, Lockheed delivers a meaningfully higher starting yield. If a retiree is buying today for income, LMT puts more cash in the mailbox per dollar invested.

Winner: LMT.

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Round 2: Growth of the Payout

Both raised in 2026, but the pace differs. RTX moved its quarterly from $0.59 in 2024 to $0.63, then $0.68, and now $0.73, a steady mid-single-digit cadence. Lockheed’s quarterly progression went from $3.00 (2023) to $3.15, then $3.30, and now $3.45, with the Q4 2025 increase of 5% extending Lockheed’s streak to 23 consecutive years of hikes. RTX’s usable dividend history is complicated by a 40.58 restructuring entry around the 2020 merger that reflects corporate reorganization rather than a real payout, so a clean multi-decade streak claim is off the table. Lockheed’s raise-per-year pace is comparable, but its record is longer, cleaner, and unbroken.

Winner: LMT.

Round 3: Dividend Durability, Coverage, and Program Risk

Here the picture flips. RTX generated $2.88 billion of free cash flow in Q2 2026 and raised full-year FCF guidance to $8.50 billion to $8.75 billion. Lockheed produced $2.92 billion of Q2 FCF with FY2026 guidance of $7.0 billion to $7.2 billion. RTX’s cash generation is larger in absolute terms, and its backlog stands at $289 billion, up 22% year over year, versus Lockheed’s $230.42 billion.

The bigger issue is what sits behind that cash. Lockheed is a pure-play defense contractor concentrated in a handful of very large programs. F-35 alone is a swing factor. F-35 deliveries fell to 19 from 50 year over year in Q2, and Q1 2026 free cash flow was negative $291 million on F-16 charges of $125 million. Fixed-price program losses have hit before. RTX spreads its exposure across Collins Aerospace, Pratt & Whitney, and Raytheon, with commercial aftermarket up 25% at Pratt and Raytheon backlog nearly half international. If a U.S. defense budget cycle tightens or one large LMT program stumbles, Lockheed’s cash line moves. RTX has the aftermarket airlines cushion to absorb it. Pratt’s powder metal matter is a real cost, but at roughly $150 million of compensation in Q2, it is bounded.

Winner: RTX.

Verdict

For a retirement-focused income investor buying today, the winner is Lockheed Martin. Retirees are paid to own yield, and LMT delivers the higher current payout, the longer clean growth record, and management explicitly returning $796 million to shareholders through dividends in the second quarter while still funding the munitions build-out. RTX has the better-diversified cash engine and would be the pick for an investor prioritizing dividend safety and a hybrid commercial-defense cycle. But retirees writing checks against their portfolio want the bigger, steadier stream now. That is Lockheed.

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