Trump Addresses Share Repurchases, Dividend Payouts, and CEO Compensation at American Defense Firms

Trump Targets Defense Contractor Buybacks and Dividends

Brendan Smialowski / AFP via Getty Images

President Donald Trump has recently set his sights on defense industry practices, specifically criticizing the use of company funds for stock buybacks and dividend payments.

Main Points

• Trump's recent comments on how corporations allocate their cash echo some progressive viewpoints.
• His active involvement in public company decisions has drawn significant attention.

Traditional strategies like share repurchases and dividend distributions have encountered a new critic in President Trump.

On Wednesday, Trump openly criticized defense contractors for engaging in stock buybacks and issuing dividends, declaring that such actions would no longer be permitted. This stance has reignited ongoing debates—some argue that buybacks help support share prices, while others believe those funds could be better invested elsewhere.

This move adds to a growing list of corporate issues where the Trump administration seeks increased oversight, including executive pay. On the same day, Trump also floated the idea of restricting large investors from purchasing residential properties.

Why This Is Important

The administration's direct intervention in sectors like semiconductors and minerals has already impacted stock prices, with defense industry shares coming under particular scrutiny this week.

Trump's assertive tactics have led to the government securing a share of Nvidia (NVDA) and AMD (AMD) chip sales, acquiring a "golden share" in U.S. Steel's deal with Nippon Steel, demanding a 10% stake in Intel (INTC) after calling for the CEO's removal, and taking equity positions in several rare earth minerals companies. These actions have been justified as necessary steps to protect economic and national security interests.

“Military equipment is not being produced quickly enough!” Trump posted on Truth Social and X. “Production must be funded using money from dividends, stock buybacks, and excessive executive pay, rather than relying on loans or government funding.”

Following these remarks, shares of Lockheed Martin (LMT), Northrop Grumman (NOC), and General Dynamics (GD) each fell by at least 4% by the end of Wednesday’s trading session.

The debate over how public companies spend their cash is a bipartisan issue. Interestingly, Trump’s criticism of buybacks aligns him with President Biden and prominent Democrats such as Bernie Sanders, Chuck Schumer, and Elizabeth Warren.

In 2022, President Biden enacted a 1% tax on stock buybacks, but this has done little to curb the practice. According to S&P Global, S&P 500 companies spent over $1 trillion on buybacks in the twelve months ending September 2025, up from $918 billion the previous year.

Looking Ahead

If Trump succeeds in formalizing his proposal to prohibit defense firms from conducting buybacks and paying dividends—and has also suggested reducing the frequency of earnings reports—it would mark a significant escalation in his approach to state involvement in corporate affairs, shifting from deal-making to direct mandates.