Data centers and defense are two of the world's hottest industries right now, and three key companies that recently lifted their dividends are beneficiaries. All three stocks have seen their share prices go on impressive runs since the start of 2025, and one is looking to raise its dividend by more than 40%.
In a market where investors are increasingly seeking both growth and income, these names stand out because their payout increases are backed by accelerating business fundamentals rather than financial engineering. Each company occupies a different corner of the global economy, but they share a common thread: structural demand tailwinds that show no signs of slowing down.
TEL: Connectivity Leader Boosts as Data Center Demand Soars
TE Connectivity (NYSE: TEL) is a leading electronics company, providing solutions across transportation, industrial, and data center markets. With a market capitalization of nearly $58 billion, TEL is one of the world’s ten most valuable stocks in the electronic equipment, instruments, and components industry.
Shares have delivered a strong total return of over 40% since the start of 2025, driven by the company's growing role in the artificial intelligence (AI) data center boom. TEL's digital data networks business, which supplies high-speed connectors and cable assemblies to hyperscale data centers, grew 70% year-over-year (YOY) last quarter. The company now expects its AI revenues in fiscal 2026 to be “a couple of hundred million dollars higher” than its prior forecast, with growth coming from all its hyperscaler customers.
Given its success, TEL is adding juice to its dividend. TEL recently boosted its dividend by 10%, moving its quarterly payout to 78 cents per share. This new dividend is payable on June 12 to shareholders of record at the close of business on May 22. The stock now holds an indicated dividend yield of approximately 1.6%. Although not particularly high, it stands solidly above the approximately 1.1% yield offered by the S&P 500 Index.
RHM: Europe's Defense Powerhouse Plans +40% Dividend Hike
Rheinmetall (ETR: RHM) is one of Europe's largest defense contractors, providing armored vehicles, air defense systems, and other solutions. Rheinmetall shares have delivered a total return near 150% since the start of 2025, with RHM being a prime beneficiary of the huge uptick in European defense spending.
This comes as NATO allies have committed to raising defense and security spending to 3.5% of gross domestic product by 2035. Germany alone, which accounted for 38% of RHM’s sales in 2025, is planning roughly 650 billion euros (approx. $742 billion) in defense spending over the next five years.
These dynamics helped Rheinmetall’s sales grow by 29% in 2025. Astoundingly, this marked the company’s highest revenue growth rate since 1997. The company’s operating margin ticked up by 50 basis points to 18.5%, and its order backlog surged 36% to a record level. Rheinmetall expects 2026 to be even better, forecasting revenue growth of 40% to 45%.
In response to the company’s strong performance in 2025 and its outlook, Rheinmetall just proposed a huge dividend increase. Its €11.50 ($13.12) per share annual dividend proposal would mark a whopping 42% increase over its previous payout. Shareholders will vote on this proposal at RHM’s Annual General Meeting on May 12. Assuming shareholders approve the dividend, which they typically do, RHM holds an indicated yield of approximately 0.7%.
Defense Giant General Dynamics Lifts Dividend After Strong 2025
General Dynamics (NYSE: GD) is an aerospace and defense company with a product portfolio that includes Gulfstream private jets, nuclear submarines, and Abrams tanks. Its market capitalization of nearly $95 billion makes GD one of the world’s top ten most valuable aerospace and defense stocks.
Shares have delivered a total return of over 35% since the start of 2025, driven by broad-based strength across GD’s business. Full-year revenue grew by around 10% to $52.6 billion, well above its 5.4% average annual growth rate over the past 10 years.
Marine Systems and Aerospace led the way, both seeing revenues rise by around 17%. The company ended 2025 with a record $118 billion backlog, up 30% YOY, highlighting the strong demand for its solutions. Combat Systems' revenue growth was only around 3%. However, orders spiked massively at the end of the year, driven by European land systems demand. In Q4 2025, Combat Systems' orders rose almost 150% compared to Q3 2025 to $10.9 billion.
Adding to the positive news is the company’s 6% quarterly dividend increase. General Dynamics' payout will move up to $1.59 per share, giving the stock a solid indicated dividend yield of approximately 1.7%. The company plans to pay its next dividend on May 8 to shareholders of record on April 10.
Europe’s Defense Rebuild Is RHM’s Opportunity
TEL, Rheinmetall, and General Dynamics are all seeing strong momentum in their businesses. Given its position at the heart of Europe's defense overhaul, Rheinmetall is particularly interesting going forward. With European defense spending still far from reaching NATO goals, the company has a strong path toward long-term growth.
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The article "Data Centers & Defense: 3 Soaring Stocks Boosting Dividends " first appeared on MarketBeat.
