President Biden warns that the risk of nuclear 'Armageddon' is at its highest point since the Cuban Missile Crisis — 3 defense stocks to consider if tensions keep rising

“We have not faced the prospect of Armageddon since Kennedy and the Cuban Missile Crisis,” he said at a Democratic fundraiser last October.

“He is not joking when he talks about potential use of tactical nuclear weapons or biological and chemical weapons, because his military is, you might say, significantly underperforming,” Biden added, referring to Russian President Vladimir Putin.

“I don’t think there’s any such thing as the ability to easily use tactical nuclear weapons and not end up with Armageddon.”

That’s a scary picture. The possibility of nuclear war makes all other problems seem trivial in comparison.

And that means for investors, there’s one segment that simply can’t be ignored — defense.

A safe haven amid global uncertainty?

In a world where technology is advancing rapidly, defense stocks may not look as exciting as the ones that come from Silicon Valley. But here’s the thing: no matter what the economy is doing — and what the Fed does to its benchmark interest rates — governments worldwide tend to prioritize national security.

In other words, defense contractors can make money even when the economy slows down. With many experts forecasting a recession this year, that’s a good quality to have.

Don’t forget, we live in a time of increasing geopolitical tensions. No one wants to see Armageddon, but if conflicts arise, you can bet that defense spending will likely increase.

In fact, the amount that countries are spending on their militaries is already astronomical. According to the Stockholm International Peace Research Institute, global military expenditure totaled $2.113 trillion in 2021.

Defense stocks for investors

With that in mind, let’s take a look at three defense stocks. This trio also pays dividends.

Lockheed Martin

Known for its F-35 fighter jets, Lockheed Martin (NYSE:LMT) is the largest defense contractor in the world by revenue.

The company operates through four business segments: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space.

In Q4 of 2022, each of the four segments delivered higher net sales compared to a year ago.

For the entire company, net sales grew 7% year over year to $19.0 billion.

Lockheed Martin pays quarterly dividends of $3.00 per share, translating to an annual yield of 2.6%.

Going forward, the company will likely remain busy as its backlog totaled $150.0 billion as of Dec. 31.

General Dynamics

General Dynamics (NYSE:GD) is deeply entrenched in the global aerospace and defense business. It offers a broad portfolio of products and services, ranging from Gulfstream business jets and combat vehicles to nuclear-powered submarines and communications systems.

In 2022, revenue grew 2.4% from 2021 to $39.4 billion while net earnings improved 4.1% to $3.4 billion.

General Dynamics chairman and CEO Phebe N. Novakovic remarked that the company had “good backlog growth” fueled by “robust demand at Gulfstream.”

Indeed, General Dynamics’ backlog of $91.1 billion was the highest in its history.