Trump Signs Executive Order Banning Defense Buybacks and Dividends

The White House resurrects the 'Department of War' moniker and offers a massive $1.5 trillion budget, but with a strict catch: profits must go to production lines, not shareholder pockets.

Editorial Team (ET)January 9, 2026

Wall Street’s favorite ATM is officially out of order. For decades, the giants of the American defense industry have operated under a comfortable, implicit bargain: secure massive government contracts, deliver hardware on a flexible timeline, and funnel the resulting profits back to shareholders in a steady stream of buybacks and dividends. That era ended abruptly this week with the stroke of a pen and a directive that feels substantially heavier than the usual political posturing.

President Donald Trump has declared that the days of financial engineering at the Pentagon are over. Under a newly signed Executive Order titled "Prioritizing the Warfighter," major defense contractors deemed "underperforming" are effectively barred from issuing stock buybacks or dividends. The administration’s logic is blunt and arguably overdue: if a company cannot deliver missiles on time, it has no business paying its investors. The order explicitly pivots the industry’s focus from quarterly earnings calls to factory floor output, demanding that cash reserves be reinvested into manufacturing capacity rather than stock prices.

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