Lockheed Martin (LMT +0.52%) and BlackSky Technology (BKSY +1.35%) are slam-dunk defense stocks worth buying now and holding on to for the long term.
President Donald Trump has floated the idea of a $1.7 trillion defense budget for the federal government's fiscal 2027, and that was in January, before he escalated the conflict with Iran. Even if whatever defense budget Congress eventually passes falls short of that request, the current geopolitical situation adds credibility to reports such as a recent one from the bipartisan Center for a New American Security that concluded that the U.S. military needs to improve its ability to counter drone attacks.
Here are three reasons to buy and hold each of these stocks.
NYSE: LMT
Key Data Points
Sound financial footing and a big backlog for Lockheed Martin
Image source: Getty Images.
Lockheed Martin ended 2025 with a record backlog of $194 billion, about two and a half times its annual sales, so the company's revenue growth for the next few years is already in the works.
The U.S. defense and aerospace company had $75 billion in sales in 2025, up 6%. Its earnings per share (EPS) fell 3.6% to $21.49, a decline that management credited to a higher tax rate, pension-related charges, and higher interest expenses. Lockheed predicts 2026 revenue of $77.05 billion to $80 billion, which would be a 4.7% increase at the midpoint, and EPS of $29.35 to $30.25, which would be up 37% at the midpoint.
Lockheed's planes and weaponry are in demand
Lockheed delivered 191 F-35 fighter jets and 120 PAC-3 MSC interceptors in 2025, record numbers for the defense contractor. It has invested heavily in artificial intelligence (AI) solutions, and some of those investments are already paying off, with over-the-air updates for its GPS III and Tranche 1 transport-layer satellites.
During the U.S.'s Operation Absolute Resolve in Venezuela in January, the company's F-35 and F-22 fighter jets were used, as well as its RQ-170 Sentinel stealth drones and Sikorsky Black Hawk helicopters.
The Lockheed product with perhaps the highest demand is the Patriot interceptor missile, which is used to destroy incoming threats. The company is increasing production capacity for those missiles from about 600 a year to 2,000 a year, and announced a plan to quadruple the number of Terminal High Altitude Area Defense (THAAD) interceptors it manufactures to 400 a year.
Dividends that reward investor patience
Lockheed raised its quarterly dividend by 4.5% in 2025 to $3.45 a share, giving it a yield of around 2.5% at its current share price.
That yield has come down somewhat because the stock is up more than 36% so far this year. The company has increased its dividend for 24 consecutive years, for a total of 684%, so if it raises it again this year, it will join the Dividend Aristocrats®, the select group of S&P 500 companies that have increased their payouts for 25 or more consecutive years. (The term Dividend Aristocrats® is a registered trademark of Standard & Poor’s Financial Services LLC.)
NYSE: BKSY
Key Data Points
The sky isn't the limit for BlackSky
BlackSky Technology, through its low Earth orbit satellites and Spectra software platform, provides high-frequency, high-resolution imagery and automated AI-powered analytics for defense and other purposes. It grew its backlog by 32% in 2025 to $345 million. The stock has climbed more than 29% so far in 2026.
The small-cap company can provide satellite imagery in real time, unlike traditional satellite systems, which may have significant lag times before they are in position to photograph the specific spot desired. BlackSky's system captures up to 15 images of each targeted location per day, which can be particularly helpful when monitoring moving targets, such as aircraft, ships, or forest fires.
BlackSky is on the road to being profitable
One thing that may cause investors to be hesitant about buying BlackSky is that it hasn't turned a profit since it went public in 2021 through a reverse merger with a special purpose acquisition company (SPAC).
That should change soon. In 2025, it reported revenue of $106.5 million, up 4.4%, and a loss of $2.09 per share, contracting from its loss of $2.67 per share in 2024. It also had its second consecutive year of positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) at $990,000. The company also booked a fourth-quarter loss of just $868,000 compared to its loss of $24.2 million in the prior-year period.
For 2026, management is predicting revenue to be between $120 million and $145 million, up 22% at the midpoint, and adjusted EBITDA between $6 million and $18 million, an increase of 122% at the midpoint.
A shift to high-margin SaaS and AI insights
Instead of just selling satellite photos, BlackSky is now moving to a software-as-a-service (SaaS) model, with tools that automatically highlight what has changed at a given location between satellite passes, and it provides the update within 90 minutes. Its move to a subscription-based model will likely result in higher gross margins that are more comparable to what software companies produce than the typical aerospace firm.
Diverse client bases help Lockheed and BlackSky
Over the past few years, the number of global conflicts has grown, requiring countries to reassess their defense needs. While Lockheed and BlackSky primarily market to the U.S. government, both have long-term contracts with U.S. allies.
Lockheed works with 50 countries, and BlackSky (though it keeps some of its deals confidential) has customers in the U.S., Europe, and Asia. That means even if the U.S. at some point trims its defense budget, these companies will have other customers to help them deliver growth.
