The U.S. Department of Defense announced a new $2.1 billion security assistance package for Ukraine.

The package includes funding for additional munitions for Patriot air defense systems, HAWK air defense systems and missiles, Puma unmanned aerial systems, laser-guided rocket system munitions, 105 mm and 203 mm artillery rounds as well as support for training and maintenance.

The new funding is being provided under the Ukraine Security Assistance Initiative (USAI).

“This USAI package illustrates the continued commitment to both Ukraine’s critical near-term capabilities as well as the enduring capacity of Ukraine’s armed forces to defend its territory and deter Russian aggression over the long term,” the Pentagon said in a statement.

Since the Russia-Ukraine war began in February 2022, the Biden administration has provided more than $39.7 billion in security assistance to Ukraine.

Developments along geopolitical conflicts often generate increased interest in the defense sector. Here’s a look at two defense contractors that stand to benefit from Biden’s new military aid package — Wall Street also sees upside in this duo. 

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Lockheed Martin Corp. (NYSE:LMT)

Bloomberg reports that one of the components of the package is the Patriot Advanced Capability Missile-3 (PAC-3) made by Lockheed Martin.

Lockheed Martin has a long track record of doing business with the U.S. Department of Defense and other federal government agencies. Out of the $66 billion of net sales the company generated in 2022, $48.5 billion — or 73% — came from the U.S. government.

Known for its F-35 fighter jets, the company has four operating segments: aeronautics, missiles and fire control, rotary and mission systems and space.

As you’d expect from the current geopolitical landscape, the defense contractor’s business is doing well. In the first quarter of 2023, Lockheed Martin generated $15.1 billion in net sales, $1.7 billion in net earnings and $1.3 billion in free cash flow.

It also returned $1.3 billion to shareholders through dividends and buybacks during the quarter. At the current share price, the company offers an annual dividend yield of 2.6%.

Citi analyst Jason Gursky has a Buy rating on Lockheed Martin and a price target of $579, implying a potential upside of 26%.

Raytheon Technologies Corp. (NYSE:RTX)

The new weapons package also includes the Guidance Enhanced Missile (GEM-T) manufactured by Raytheon, according to Bloomberg.

Raytheon is another heavyweight player in aerospace and defense. In 2022, it brought in $67 billion in sales, up 4% from 2021.

Business continues to grow in 2023.

According to its latest earnings report, Raytheon generated $17.2 billion in sales in the first quarter, representing a 10% increase year over year. Adjusted earnings per share came in at $1.22, up 6% from the year-ago period.

Like Lockheed Martin, Raytheon is a dividend-paying company. With a quarterly payout of 59 cents per share, the stock offers an annual yield of 2.4%.

Baird analyst Peter Arment has an Outperform rating on Raytheon and a price target of $115 — around 16% above where the stock currently sits.

Raytheon has been paying cash dividends every year since 1936. But aerospace and defense isn’t the only place investors can find dividend opportunities. For instance, passive income investors have long been attracted to residential real estate because of its potential for providing consistent rental income and building long-term wealth.

Whether it’s war or peace, people will always need a place to live, and a growing number of people are now renting instead of buying. These days, there also are options to invest in rental properties with as little as $100.

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Photo: Kyiv, Ukraine February 20, 2023 U.S. President Joe Biden and Ukraine's President Volodymyr Zelenskiy attend a joint news briefing, amid Russia's attack on Ukraine. Courtesy of photowalking on Shutterstock.