Defense Stock Face-Off: Lockheed Martin vs. Howmet Aerospace -- Which Is the Better Buy Right Now?

Lockheed Martin (NYSE: LMT) and Howmet Aerospace (NYSE: HWM) are at different ends of the defense market. Lockheed is a defense and aerospace conglomerate that produces everything from fighter jets to missiles to spacecraft. Howmet is smaller, focusing on specialized parts for the defense and aerospace industries.

Both stocks have taken off so far this year, with their shares rising by roughly 21% to 25% this year through market close April 16, benefiting from additional defense spending tied to the conflict in Iran. Which is the better buy for investors right now?

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Howmet is a growth machine

Howmet products include jet engine components, forged aluminum wheels, aerospace fastening systems, and airframe structural components, the nuts and bolts of the aerospace and defense industries. Its structural and engine components are vital to Lockheed's F-35 Lightning II program.

The company is coming off a record year in which revenue rose 11% to $8.3 billion, and earnings per share (EPS) climbed 32% to $3.71. The company's mission-critical components, including turbine blades that operate in extreme heat and require frequent replacement, drove a 33% increase in spare parts revenue in 2025.

The war in Iran -- though we don't know how long it will last -- only pushes the company's likely growth this year. In mid-February, before Israel and the U.S. attacked Iran, the company forecast 2026 revenue of $9 billion to $9.2 billion, up 9.6% at the midpoint, and adjusted EPS of $4.35 to $4.55, up 18% at the midpoint.

That growth would give it enough free cash flow to continue boosting its dividend. It raised it by 20% last year to $0.12 per quarterly share, giving a dividend yield around 0.18% at its current share price. The company also spent $700 million on share repurchases in 2025.

Lockheed Martin's diversity gives it strength

The Trump administration is calling for the 2027 U.S. defense budget to jump to $1.5 trillion, and Lockheed's position as the lead contractor for the F-35 and major missile programs ensures a steady stream of cash flow that is largely insulated from traditional economic recessions.

Lockheed is a huge, mature company and thus won't have the level of growth that Howmet will. However, its 2025 revenue was $75 billion, dwarfing Howmet and up a respectable 6%. EPS was $21.49, down 23% due to significant non-recurring charges and performance-related losses on specific programs. However, it had a record $194 billion backlog, two and a half years of revenue at its 2025 pace.

The company forecast 2026 revenue between $77.5 billion and $80 billion, up 5% at the midpoint, and EPS between $29.35 and $30.25, a rise of 38.5% at the midpoint. Those forecasts were reported on Jan. 29, roughly a month before the current hostilities between the U.S. and Israel and Iran began. The war has triggered a huge restocking cycle for precision munitions. Lockheed's missiles and fire control segment is a primary beneficiary, recently securing a $4.7 billion Army contract for missile production.

Lockheed has increased its dividend for 23 consecutive years, including a 5% boost last year to $3.45 per quarterly share. That gives the stock a yield of around 2.2%.

Two great defense stocks; one clear winner

While Howmet Aerospace is showing impressive growth, it is trading at more than 54 times forward earnings estimates, more than twice that of Lockheed's forward price-to-earnings ratio of 20.6. That means much of Howmet's growth is already priced in. In addition, while it has increased its dividend, it doesn't have the long dividend history or the high dividend yield that Lockheed has.

Both stocks will benefit from any increased defense spending, but the combination of steady income production, a huge backlog, and greater diversity makes Lockheed Martin a better buy for now.

James Halley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Howmet Aerospace. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.