NEW YORK, Jan 11, 2026, 04:50 ET — Market closed.
Shares of RTX (RTX.N) rose 0.7% to close at $188.50 on Friday. Investors now face a White House directive aimed at curbing dividends and stock buybacks by major defense contractors. (The White House)
Timing is crucial here since capital returns drive why many investors stick with defense stocks, especially when procurement cycles get uneven. If payout rules begin to depend on delivery scorecards, boards could face pressure to adjust buyback schedules, bonus structures, and even bidding strategies.
Defense contractors have reached out to legal counsel over the enforceability and potential court challenges of new measures, Reuters reported, citing three sources. Kristine Liwag, a Morgan Stanley analyst, described the combination of a larger defense budget push and payout limits as “carrots and sticks.” The report noted that major contractors—including RTX and its peers—distributed around $8 billion in dividends and repurchased about $10 billion in stock over the last year. (Reuters)
A Sidley Austin note said the order requires the Secretary of War to identify underperforming contractors within 30 days, with 15 days allowed for board-approved remediation plans following notice. It also mandates that payout and executive-pay terms be included in future contracts within 60 days. The directive hints at a potential review of the SEC’s Rule 10b-18 “safe harbor” that governs share repurchase practices. (Sidley Austin)
Defense stocks outpaced RTX on Friday, with Lockheed Martin surging roughly 4.7% and Northrop Grumman jumping about 4.8%. L3Harris added around 3.1%, while General Dynamics inched up 0.7%. The iShares U.S. Aerospace & Defense ETF gained close to 2.4%, and the SPDR S&P Aerospace & Defense ETF advanced nearly 2.9%.
The broader market lent support. The S&P 500 and Dow closed Friday at record levels, despite a mixed U.S. jobs report. Investors remain divided over the pace of the Federal Reserve’s next rate cuts. (AP News)
RTX holders are now focused on whether the company or regulators will define “underperforming” more clearly and how that benchmark will apply across contracts. Traders are also waiting to see if this policy talk translates into action — changes to contract language, shifts in award decisions, or perhaps a silent pause on buybacks while the details get hashed out.
The downside is straightforward: uncertainty remains. A protracted legal battle or a strict enforcement stance could leave payout questions unresolved. Any rumors about withheld payments or contract penalties would probably sour sentiment quickly, even if the situation unfolds slowly in reality.
RTX will release its fourth-quarter and full-year 2025 results on Tuesday, Jan. 27, ahead of the open. The company also set an 8:30 a.m. ET conference call to outline its 2026 outlook. Investors are keenly watching this date for clues on capital returns under the new leadership. (RTX)
