Businesses ask Senate to kill a plan to limit stock buybacks and dividends

• Donald Trump’s effort to limit defense stock buybacks could be included in a major defense bill.

• More than 40 trade groups are urging the Senate to halt pressure to limit buybacks and dividends.

• They argue that dividends are important for day investors.

Businesses are calling on Congress to remove from the bill a measure that would restrict defense contractors from paying dividends or buying back stock.

More than 40 business and industry groups have penned a letter to the Senate calling for action on Section 815 of the National Defense Authorization Act, which would effectively prohibit companies that contract with the Defense Department from buying back their own stock or paying dividends.

“If passed, Section 815 would harm millions of American retirees and other investors by restricting the lawful return of capital to shareholders and set a troubling precedent for federal intervention in corporate governance and capital allocation decisions,” the letter said.

President Trump first discussed the idea Defense contractors were barred from share buybacks in January. First statements triggered a sale hits industry leaders in defense stocks General Dynamic, Northrop Grumman And LockheedMartin.

Months later, business groups and the Chamber of Commerce are calling on the Senate to fully remove Section 815 from the NDAA, making clear they face serious consequences if the bill becomes law.

The letter, signed by a list of pro-business organizations including the U.S. Chamber of Commerce, the American Bankers Association and the American Capital Formation Council, highlighted the worrying elements these businesses and organizations see in Trump’s plan.

They framed their argument around the idea that the move would harm “main street investors” because Section 815 would limit the two primary ways a company can return money to shareholders. This could be a blow to retirement funds for many Americans, given how many people own stocks through 401(k) and Roth IRA accounts, the letter’s authors said.

“Stock buybacks are another common way to provide financial returns to investors,” the letter states. “Supporters of restricting buybacks argue that when companies choose to buy back their own shares, they take away capital from research and development, manufacturing, or other investments. Such claims are patently false.”

Trump’s January executive order was framed as a way to punish contractors for poor performance.

“Every firm in our economy has the right to profit from prudent investments and hard work, but the American defense industrial base also has the responsibility to ensure that America’s warplanes have the best equipment and weapons possible,” the order said. In a post on Truth Social, the president said: “MILITARY EQUIPMENT IS NOT BEING MADE FAST ENOUGH!”

Share buybacks It is sometimes criticized as a way for companies to artificially boost stock prices regardless of their actual performance, but the business and trade groups that signed the letter say they are important for individual investors as well as large institutions.

Citing a study by the U.S. Chamber of Commerce, the letter states that retail investors have saved $4.2 billion over the past 17 years as a direct result of share buybacks.

“Some of the newest investors in the market Trump Accounts“A program committed to consistent returns in the stock market,” the letter said. “Restrictions on the return of capital to shareholders could limit investment returns and threaten the long-term success of this program.”

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