Investing in defence stocks (or “defense stocks” if you’re from the other side of the Atlantic and happen to love sports and hot dogs) offers a unique opportunity to own a piece of the global military sector, which has historically provided stability and long-term growth.
With governments worldwide consistently allocating substantial budgets to national security, the sector remains resilient even during economic downturns. This guide will help you identify the best defence stocks and key global players, get a better understanding of the risks, and hopefully place you in a better position to make informed investment decisions about holding defence shares in your portfolio.
26 March, 2025: In her Spring Statement, chancellor Rachel Reeves set out plans to make the UK a “defence industrial superpower”. The goal comes backed by a £2.2 billion boost to the Ministry of Defence (MoD) budget, with at least 10% to spent on new technologies, focusing on areas like drones and AI. It’s a move that’s likely to lead to contuining interest in UK defence stocks, as other countries like Germany and the US also increase their defence budgets.
Unfortunately it’s impossible to predict what will be the best defence stocks in any given year. But, to give you some starting inspiration, here are the top holdings in the MarketVector™ Global Defense Industry Index along with some additonal options that are popular across UK trading apps.
Defence stock |
Icon |
1-year performance (to Apr. '25) |
5-year performance (to Apr. '25) |
Link |
|---|---|---|---|---|
| Babcock International Group PLC (BAB) |  |
40.35% | 88.50% | More info |
| BAE Systems plc (BA) |  |
26.58% | 221.74% | More info |
| Booz Allen Hamilton Holding (BAH) |  |
-21.25% | 47.97% | More info |
| BWX Technologies (BWXT) |  |
10.68% | 103.99% | More info |
| Curtiss-Wright Corporation (CW) |  |
28.60% | 249.79% | More info |
| Leidos Holdings (LDOS) |  |
14.49% | 53.99% | More info |
| Leonardo SpA (0ONG) |  |
88.01% | 471.66% | More info |
| Palantir Technologies Class A (PLTR) |  |
322.92% | 645.73% (3 years – 2020 IPO) | More info |
| Qinetiq Group PLC (QQ) |  |
9.28% | 21.28% | More info |
| Rheinmetall AG (RHM) |  |
160.96% | 2,426.32% | More info |
| Rolls-Royce Holdings PLC (RR) |  |
74.43% | 567.03% | More info |
| Thales S.A. (HO) |  |
57.76% | 267.65% | More info |
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
Here are some of the biggest defence exchange-traded funds (ETFs) available to UK investors:
Defence ETF |
Icon |
1-year performance (to Apr. '25) |
5-year performance (to Apr. '25) |
Link |
|---|---|---|---|---|
| Global X Funds (SHLD) |  |
54.94% | N/A | Invest Capital at risk |
| HANetf ICAV - Future of Defence ETF - Accumulating (NATO) |  |
43.98% | N/A | Invest Capital at risk |
| Invesco Markets II plc - Invesco Defence Innovation ETF (IVDF) |  |
N/A | N/A | Invest Capital at risk |
| iShares Global Aerospace & Defence ETF USD (Acc) (DFND) |  |
10.10% | N/A | Invest Capital at risk |
| VanEck Defense ETF A USD GBP (DFNG) |  |
50.35% | 114.85% (2 years) | Invest Capital at risk |
If you're interested in investing in this industry, take a closer look at what companies in this industry do and how the stocks have historically performed. Keep in mind that positive past performance doesn't guarantee that a stock will continue to rise in the future.
Babcock International Group PLC, together with its subsidiaries, engages in the design, development, manufacture, and integration of specialist systems for aerospace, defense, and security in the United Kingdom, rest of Europe, Africa, North America, Australasia, and internationally. It operates through four segments: Marine, Nuclear, Land, and Aviation. The company offers aircraft carriers, frigates, warships, submarines and equipment, weapons handling and launch systems, liquid gas handling and engineering systems, secure military communications systems, autonomous and uncrewed aerial systems, and technology-enabled solutions for secure communications, electronic warfare, and air defense applications.
Babcock International Group is listed on the London Stock Exchange (LSE), has a trailing 12-month revenue of around 4.6 billion and employs 28,343 staff.
Capital at risk
BAE Systems plc provides defense, aerospace, and security solutions in the United Kingdom, the United States, Middle East, Australia, Japan, Europe, and internationally. The company operates through five segments: Electronic Systems, Platforms & Services, Air, Maritime, and Cyber & Intelligence. The Electronic Systems segment offers electronic warfare systems; navigation systems; electro-optical sensors; military and commercial digital engine and flight controls; precision guidance and seeker solutions; generation military communications systems and data links; persistent surveillance capabilities and electric drive propulsion systems, as well as space electronics; spacecraft; ground and tactical systems.
BAE Systems is listed on the London Stock Exchange (LSE), has a trailing 12-month revenue of around £26.3 billion and employs 107,400 staff.
Capital at risk
Booz Allen Hamilton Holding Corporation provides management and technology consulting, analytics, engineering, digital solutions, mission operations, and cyber services to governments, corporations, and not-for-profit organizations in the United States and internationally. It focuses on artificial intelligence services comprising of machine learning, predictive modeling, automation and decision analytics, and quantum computing. The company offers artificial intelligence, machine learning, and computer network related operations.
Booz Allen Hamilton Holding is listed on the NYSE, has a trailing 12-month revenue of around £11.8 billion and employs 35,900 staff.
Capital at risk
BWX Technologies, Inc. , together with its subsidiaries, manufactures and sells nuclear components in the United States, Canada, and internationally. It operates through two segments, Government Operations and Commercial Operations. The company designs and manufactures precision naval nuclear components, reactors, and nuclear fuel; close-tolerance and high-quality equipment for nuclear applications; critical nuclear components, fuels and assemblies for government and limited other uses; down blend government stockpiles of uranium; and fabricate fuel-bearing precision components.
BWX Technologies is listed on the NYSE, has a trailing 12-month revenue of around $2.7 billion and employs 8,700 staff.
Capital at risk
Curtiss-Wright Corporation, together with its subsidiaries, provides engineered products, solutions, and services mainly to aerospace and defense, commercial power, process, and industrial markets worldwide. It operates through three segments: Aerospace & Industrial, Defense Electronics, and Naval & Power. The Aerospace & Industrial segment offers industrial and specialty vehicle products, such as power management electronics, traction inverters, transmission shifters, and control systems; sensors, controls, and electro-mechanical actuation components used on commercial and military aircraft; and surface technology services including shot peening, laser peening, and engineered coatings.
Curtiss-Wright Corporation is listed on the NYSE, has a trailing 12-month revenue of around $3.1 billion and employs 8,800 staff.
Capital at risk
Leidos Holdings, Inc. , together with its subsidiaries, provides services and solutions for government and commercial customers in the United States and internationally. The National Security & Digital segment provides national security software; services by using artificial intelligence and machine learning to coordinate sea, ground, air, and space to help warfighters; offensive, defensive, and physical cyber operation solutions; intelligence analysis, operational support, logistics operations, security, linguistics, force production, biometrics, chemical, biological, radiological, nuclear, and explosives, energetics, training, and IT services and solutions; and Digital Modernization and transformation services.
Leidos is listed on the NYSE, has a trailing 12-month revenue of around $16.7 billion and employs 48,000 staff.
Capital at risk
Leonardo S. p. , an industrial and technological company, engages in the helicopters, defense electronics and security, cyber security and solutions, aircraft, aerostructures, and space sectors in Italy, the United Kingdom, rest of Europe, the United States of America, and internationally. The company offers a range of helicopters for battlefield/personnel recovery, combat, maritime, training, VIP/executive transport, medical and rescue, energy, security, and utility services, as well as provides support and training services.
Leonardo is listed on the London Stock Exchange (LSE), has a trailing 12-month revenue of around $17.8 billion and employs 59,083 staff.
Capital at risk
Palantir Technologies Inc. builds and deploys software platforms for the intelligence community to assist in counterterrorism investigations and operations in the United States, the United Kingdom, and internationally. It provides Palantir Gotham, a software platform, which enables users to identify patterns hidden deep within datasets, ranging from signals intelligence sources to reports from confidential informants, as well as facilitates the hand-off between analysts and operational users, helping operators plan and execute real-world responses to threats that have been identified within the platform.
Palantir Technologies IncClass A Common Stock is listed on the NYSE, has a trailing 12-month revenue of around €2.9 billion and employs 3,936 staff.
Capital at risk
QinetiQ Group plc operates as a science and engineering company in the defense, security, and infrastructure markets in the United Kingdom, the United States, Australia, and internationally. The company operates through EMEA Services and Global Solutions segments. It offers advanced materials and manufacturing products; artificial intelligence, analytics, and advanced computing technologies; cyber and electromagnetic technologies; human protection and performance systems; novel systems, and weapons and effects; platform, and system design and assessment products; power sources, and energy storage and distribution products; robotics and autonomy services; secure communications and navigation systems; and sensing, processing, and data fusion systems.
Qinetiq Group is listed on the London Stock Exchange (LSE), has a trailing 12-month revenue of around $2 billion and employs 8,500 staff.
Capital at risk
Rheinmetall AG provides mobility and security technologies worldwide. The company operates in five segments: Vehicle Systems, Weapon and Ammunition, Electronic Solutions, Sensors and Actuators, and Materials and Trade. The Vehicle Systems segment offers combat, logistics, support, and special vehicles, including armored tracked vehicles, CBRN protection systems, artillery, turret systems, and wheeled logistics and tactical vehicles. The Weapon and Ammunition segment provides firepower and protection solutions, such as weapons and munition, protection systems, propellants and international projects and services.
Rheinmetall is listed on the XETRA, has a trailing 12-month revenue of around £9.8 billion and employs 28,539 staff.
Capital at risk
Rolls-Royce Holdings plc develops and delivers mission-critical power systems in the United Kingdom and internationally. The company operates through four segments: Civil Aerospace, Defence, Power Systems, and New Markets. The Civil Aerospace segment develops, manufactures, markets, and sells aero engines for large commercial aircraft, regional jet, and business aviation markets, as well as provides aftermarket services. The Defence segment is involved in the development, manufacture, marketing, and sale of military aero engines, naval engines, and submarine nuclear power plants, as well as offers aftermarket services.
Rolls-Royce is listed on the London Stock Exchange (LSE), has a trailing 12-month revenue of around €18.9 billion and employs 42,400 staff.
Capital at risk
Thales S. A. provides various solutions in the defence and security, aerospace and space, digital identity and security, and transport markets worldwide. It operates through Aerospace, Defence & Security, Digital Identity & Security, and Ground Transportation Systems business segments. The company offers communications, command, and control systems; mission services and support; protection and mission/combat systems; surveillance, detection, and intelligence systems; training and simulation solutions for air, land, naval, and joint forces; and digital identity and security solutions.
Thales S-A is listed on the Euronext Paris (PA), has a trailing 12-month revenue of around £20.6 billion and employs 83,206 staff.
Capital at risk
Investing in defence stocks from the UK can paradoxically offer potential long-term stability and steady, given the worldwide appetite for strong defence sector spending and global defence partnerships. With major firms like BAE Systems and Rolls-Royce, the UK remains a key contributor to international defence and security.
However, investors should also consider international options for more diversification. But, it’s important to remember that the share price performance of defence stocks can depend on factors such as government budgets, geopolitical risks, and global conflict. Diversifying within the sector and staying informed on policy changes can help you stay ahead of the curve if you’re looking to buy defence stocks.
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
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