WASHINGTON — Defense giant RTX will continue to issue dividends to shareholders, the company’s CEO said today in his first comments since President Donald Trump lambasted defense primes for their financial practices and singled out an RTX subsidiary for being “least responsive to the needs of the Department of War.”
“As it relates to capital allocation, we recognize our shareholders rely on our dividends, and they’ve come to expect our dividends. We’ve been paying them for decades on a quarterly basis. So we remain committed to the dividend,” RTX CEO Chris Calio told investors during an earnings call this morning.
“That said, again, we’re comfortable we can accommodate both the investment needs that come with delivering the current backlog and the potential future volumes on key programs,” he added. “I can tell you that we continue to have active and constructive engagement with the [Defense Department] on its future needs and how we can fulfill those and strengthening the industrial base.”
In a later call, Northrop Grumman CEO Kathy Warden also confirmed that the company would continue paying dividends, although Chief Financial Officer John Greene added that the company plans to halt stock buybacks at the end of the month.
“What the team saw was [a] robust, robust opportunity to deliver future earnings through investment,” he said. “So we made a decision to keep the share count flat and increase our spending on property [and] plant equipment in order to build out the industrial base.”
Any annual increases to dividends would be decided in May after consultation with its board of directors, he added.
RTX and Northrop are the first major defense companies to declare fourth quarter 2025 earnings this week, and their approach on dividends could signal how industry at large is interpreting an executive order signed by Trump on Jan. 7 following aggressive, public demands. (L3Harris, which reports its earnings on Thursday, announced a boost to quarterly dividends last week.)
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On Jan. 7 Trump wrote in a Truth Social post that he would not permit dividends or stock buybacks until defense contractors rectified issues with slow deliveries and low capital investment.
“While we make the best Military Equipment in the World (No other Country is even close!), Defense Contractors are currently issuing massive Dividends to their Shareholders and massive Stock Buybacks, at the expense and detriment of investing in Plants and Equipment. This situation will no longer be allowed or tolerated!” he wrote.
The next post called out Raytheon — RTX’s weapons making arm — as a prime offender, stating that the company “has been the least responsive to the needs of the Department of War, the slowest in increasing their volume, and the most aggressive spending on their Shareholders rather than the needs and demands of the United States Military.”
However, the executive order released hours after that post took a nuanced approach, tasking the Defense Department to identify “underperforming” defense firms that are not investing in production facilities or producing at the speeds deemed necessary by the department. Those companies would be given an opportunity to establish a “remediation plan” to tackle outstanding issues, the order said.
Failing that, the department can take action “to secure remedies” to expedite production and improved production. Future contracts should also include provisions “prohibiting both any stock buy-back and corporate distributions by the contractor during a period of underperformance,” the EO stated.
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Despite the harsh words in Trump’s Truth Social post earlier this month — many of which were repeated in Trump’s speech last week at the Davos gathering in Switzerland — Calio said that RTX’s relationship with the Pentagon remains “very constructive and collaborative” and that the company is supportive of the department’s goals of increasing production capacity and speed.
“Across the organization, we absolutely feel the responsibility and urgency to deliver more and to deliver it faster. And you know, candidly, we understand the frustration, and I can tell you our focus and resources are fully aligned with the department’s mandate to ramp production and invest in capacity,” he said.
Calio touted some areas of progress in 2025 — such as a 20 percent bump in production on munitions like GEM-T, AMRAAM and Coyote — but noted more work remains to be done.
“We are working in partnership with them on ways to move output faster and to accelerate whether that be through different requirements or testing protocols or anything within our shop that can make things more efficient in partnership with the customer,” he said. “We’re also talking to them about, how do we get the most out of our existing capacity? What suppliers do we need help with, whether that be from a throughput perspective or an investment perspective, and then where do we need to invest in capacity as we see the demand continuing to ramp?”
In 2026, RTX plans to increase its capital expenditure spend from $2.6 billion to $3.1 billion, with investments meant to increase production capacity for weapons like the Standard Missile, AMRAAM, Tomahawk and Patriot systems, Calio said.
Northrop’s Warden also expressed support for the department’s push to increase weapons production capacity and speed, noting that the company is now prioritizing the development of lower-cost weapons that can be fielded more quickly, such as its new Project Talon drone.
Executives said Northrop would raise capital expenditures from $1.45 billion to $1.65 billion in 2026, with a focus on solid rocket motors, missile defense, advanced technologies and classified programs.
One opportunity to scale production is the B-21 program, where Northrop and the Air Force have been discussing a plan to increase the production rate for the new bomber. Warden said she is “optimistic” that Northrop and the service will finalize an agreement by the end of March. If a deal is reached, Northrop would likely invest a further $2 billion to $3 billion in that effort over the next several years, she said.