These 3 European defence stocks have been rising in 2024, here’s why

STOXX Europe Total Market Aerospace & Defence Index is up more than 25% year-to-date due to the ongoing geopolitical tensions in Europe and more recently in the Middle East.

But the following 3 European defence stocks have been gaining even more so than their U.S. counterparts. Let’s explore why.

Rheinmetall AG (ETR: RHM)

Rheinmetall is currently up a whopping 80% for the year primarily on the back of the Israel-Hamas conflict.

Shares of this German firm are noting a more pronounced move because European countries opted to trim their defence budgets after the Cold War while the United States kept it high post 9/11.

In other words, the EU defence budget is expanding this year but from a lower base than the U.S – and that’s translating to a bigger benefit for the likes of Rheinmetall.

$RHM is attracting investors because it pays a dividend yield of over 1.0% at writing as well.

Leonardo SpA (BIT: LDO)

Leonardo is also a European defence stock that has been in a sharp uptrend since the start of 2024.

Part of the reason is that members of the European Union aim to procure about half of the defence related products from companies based out of their continent instead of relying on imports.

Now that defence budgets are climbing due to the Ukraine war and ongoing tensions in the Middle East, that commitment is delivering an upsized benefit to the relevant stocks including $LDO.

Leonardo stock is up roughly 50% for the year at writing.

Thales SA (EPA: HO)

Another European defence stock that’s been rallying this year because of the ongoing conflict between Israel and Hamas.

Note that members of NATO target spending 2.0% of their gross domestic product on defence. In 2024, 18 members of the alliance are on course to hitting that target versus only three in 2014.

Even Germany has committed 2.0% of its GDP to defence in 2014 for the first time in more than three decades due to the widespread geopolitical tensions.

And that’s helping European defence stocks like Thales rally this year. Wall Street currently has a consensus “overweight” rating on $HO.

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