Tensions between India and Pakistan have recently escalated, drawing attention to the defense sector, particularly following the tragic terror attacks in Pahalgam. Investors are keenly observing defense stocks not only for their strategic importance but also due to promising dividend announcements. If you’re considering an investment in this sector, here are three defense stocks with noteworthy dividend yields to keep on your radar.

Top Defense Stocks with Attractive Dividend Yields

Hindustan Aeronautics Limited (HAL)

Hindustan Aeronautics Limited stands out with an impressive annual dividend yield of 0.85%. The company recently declared an interim dividend of ₹25 for Q3 of FY25, marking its only dividend distribution for the fiscal year. As a prominent player in the aerospace and defense industry, HAL boasts a substantial market capitalization of ₹3.08 lakh crore as of April 30. Among mutual funds, HDFC Flexi Cap Fund (Regular Plan) leads with a significant investment of ₹626.62 crore, acquiring 1.5 million shares, which constitutes 0.9% of the company. Additionally, foreign institutional investors (FIIs) own 12.3% of HAL’s shares, while domestic institutional investors (DIIs) hold 8.2%.

Bharat Forge Limited

Next on the list is Bharat Forge, offering a solid annual dividend yield of 0.82%. The company’s latest dividend payout was ₹2.5 per equity share in the third quarter of FY25, which was the only dividend for the financial year 2024-25. Operating primarily in the forgings sector, Bharat Forge has a market capitalization of ₹54,126.80 crore as of April 30. Nippon India Growth Fund stands out as the largest institutional investor, holding a 1.92% stake with 5.44 million shares purchased for ₹636.49 crore. Despite reporting a net profit of ₹212.78 crore in Q3 FY25—a decline of 16.4% year-over-year—the company remains a key player in the defense landscape.

Bharat Electronics Limited (BEL)

Finally, Bharat Electronics Limited (BEL), a new entry in the Nifty 50, offers a competitive annual dividend yield of 0.75%. The company declared an interim dividend of ₹1.5 per equity share for FY25, with an ex-dividend date set for March 11. Another major player in the aerospace and defense sector, BEL’s market capitalization reached ₹2.32 lakh crore as of April 30. The Nippon India CPSE ETF is the largest investor, acquiring a 17.33% stake, amounting to 21.65 crore shares for a total of ₹6,522.85 crore. DIIs hold 20.9%, while FIIs possess 17.3% of BEL shares. In the past month, BEL’s stock price has appreciated by 7.44%, reflecting positive market sentiment.

Investing in defense stocks like HAL, Bharat Forge, and BEL can be a strategic move given the current geopolitical climate. With their solid dividend yields and significant market presence, these companies are worth considering for your portfolio.