In this post, Ill show you how to invest in European defence stocks, a rising slice of the market getting extra attention because countries are spending more on military gear and because world politics feel shaky.
As NATO members and EU nations boost budgets, weapon-makers, aircraft builders, and tech firms are landing big orders. Well walk through simple buying methods, meet the top companies in the game, and flag the risks, so you can weigh your options wisely.
What are European defence stocks?
European defence stocks let investors buy a piece of companies based in Europe that design, build, and deliver military gear, high-tech weapons, and security services.
Because these firms work hand-in-hand with national governments and groups like NATO, they are seen as vital to keeping countries and regions safe.
Major names in this arena include BAE Systems from the U.K., Rheinmetall out of Germany, Thales Group in France, and Italy’s Leonardo S.p.A. .
Together they turn out everything from main battle tanks and military jets to advanced cyber-shields, and since their orders usually come with long public contracts, many investors view them as a solid mix of steady income and growth.
How To Invest In European Defence Stocks
Step 1: Sign Up on eToro

First, head to www.etoro.com and open a free account. Youll also need to upload an ID so eToro can confirm who you are, like law requires.
Step 2: Fund Your Account
Next, put money into the account with a credit card, bank transfer, PayPal, or any method eToro accepts. You can even pick a base currency, such as EUR, GBP, or USD, before the first deposit.
Step 3: Search for Defence Companies
Hit the search box and type the name or ticker of a big European defence firm listed on a world exchange. Here are a few popular choices:
- BAE Systems (BA.L) – United Kingdom
- Rheinmetall (RHM.DE) – Germany
- Leonardo (LDO.MI) – Italy
- Thales (HO.PA) – France
Remember: depending on your country, some of these may show up as fractional shares rather than whole ones.
Step 4: Buy the Stock
Pick the company, tap Trade, type how much money you want to spend, decide if you want leverage (for seasoned traders), and then hit Open Trade to buy.
Step 5: Track and Manage Your Investment
eToro lets you watch your portfolio live, check profits on the spot, and even copy or chat with other traders who specialize in defence stocks.
Why Invest in European Defence Stocks?

Increased military spending post-Ukraine war and NATO commitments
After Russia attacked Ukraine, many European nations slapped hefty increases onto their defence budgets. Pressure to meet-and even top-the NATO 2%-of-GDP guideline now locks in years of steady demand for trucks, missiles and high-tech gear.
Shift towards self-sufficiency in European arms production
Europe no longer wants to rely on American factories alone, so it is pouring cash into home-grown weapons plants. That push breeds fresh jobs, sparks local invention and sweetens the profit story for investors watching regional defence shares.
Government contracts and long-term cash flows
Defence firms grab big, multi-year orders from the state that promise money long before the first bolt is tightened. Those contracts cushion profits and lower the risk worry, making European weapon-makers prized by investors after reliable dividends.
Defensive nature of the sector in economic downturns
Armies buy rockets whether the stock market is roaring or sliding, since security bills never go on sale. Because of that, defence stocks offer a steadier seat during turbulence and can even calm the overall swings in a portfolio.
Key Factors To Evaluate Before Investing

Government Contracts & Political Risk
Defense firms depend on government orders. When elections, new policies, or export bans change the game, even the healthiest balance sheet feels the strain. Stability, therefore, is a must-watch.
R&D Capabilities and Technological Edge
Heavy spending on research lets companies outpace rivals. Breakthroughs in drones, cyber tools, or A.I. unlock more contracts and keep growth riders firmly buckled.
ESG Considerations & Public Sentiment
Many ESG investors shy away from arms makers because of ethics. Bad headlines or exclusion lists can shrink demand and weigh on share prices over time.
Dividend Policy and Financial Health
Look at dividends, debt, and steady cash flow. Regular raises and a solid balance sheet spell sound finances and appealing returns for patient shareholders.
Geopolitical Catalysts
Wars, new treaties, or sudden tensions often launch defense stocks skyward overnight. Keeping an eye on world headlines helps you spot timely entry signals.
Risks and Challenges
Regulatory risk and arms export restrictions
Weapon makers live under tight trade rules that change overnight. When governments block or slow sales abroad, deals drag on, buyers pull back, and profits-and investor faith-take a hit.
Ethical concerns and ESG limitations
Big funds and individual savers still steer clear of arms stocks because of basic ethics. Many ESG ratings box these firms out, shrinking the pool of buyers and keeping prices weak.
Currency risk for non-EU investors
Investors outside the euro zone always watch the money barometer. Sudden shifts between local cash and euros can slice gains on European defense shares.
Market volatility during peace times
Weapons stocks often drift or even dip when the world is calm. Less talk of conflict shrinks military budgets, cools future orders, and drains the excitement that usually drives shares.
Conclusion
In short, putting money into European defence shares looks promising over many years. Increased military budgets, the push for strategic independence, and steady government work are the main drivers.
The sector tends to be sturdy and pays decent dividends, but it isnt risk-free; new rules, ESG worries, and market swings still pop up. Smart investors do their homework, spread money across several firms, and keep a close eye on the ever-changing world of politics and conflict.
FAQ
How do I buy European defence stocks?
You can buy them through online brokerage platforms like eToro, DEGIRO, Interactive Brokers, or Trading 212. Simply open an account, fund it, and search for the company by name or ticker.
Are there ETFs that include European defence companies?
Yes, some ETFs include European defence firms as part of broader aerospace or industrial portfolios. Examples include iShares Aerospace & Defense and STOXX Europe Industrial Goods ETFs.
What are the risks involved?
Risks include regulatory restrictions, ethical concerns, ESG exclusions, currency fluctuations for non-EU investors, and market volatility during periods of peace or reduced defence budgets.