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How They (And You) Make Money Off Disasters

War
War is hell, but also very profitable.

In decades past, being called a "war profiteer" was a high-level insult. Today, it could serve as the elevator pitch for a business model.

With the U.S. embroiled in a nearly decade-old war in Iraq, paired with ongoing operations in Afghanistan, there is no shortage of companies turning a profit amid violence. The defense and Homeland Security market represents nearly 5% of U.S. GDP.

Lockheed Martin (LMT) is the largest military contractor in the world. Investors have reaped a more than 10% dividend during each year of these two wars.

Other companies with a predilection for defense contracts, both for combat and rebuilding efforts, include Halliburton (HAL), Northrop Grumman (NOC), Boeing (BA), DynCorp International (DCP), Alliant Techsystems (ATK), L-3 Communications (LLL), General Dynamics (GD), Perini (PCR), URS (URS), Fluor (FLR) and Bechtel.

Navistar (NAV), Textron (TXT) and Force Protection (FRPT) have all boosted their bottom line making armored, mine-resistant vehicles. Earlier this month, Oshkosh (OSK) was awarded a $904 million contract to build 7,000 additional tactical vehicles for the U.S. Army.

Retail investors also have the choice of funds to work with if they seek upside from the horrors of war.

The PowerShares Aerospace & Defense ETF (PPA) tracks the Spade Defense Index (DXS), made up of more than 50 firms with business activities that include naval vessels, military aircraft, missiles and munitions, homeland security and space systems.

The iShares Dow Jones U.S. Aerospace & Defense Index Fund (ITA) tracks the Dow Jones U.S. Select Aerospace & Defense Index and includes among its holdings General Dynamics, Lockheed Martin, Northrop Grumman and Raytheon (RTN).

The Fidelity Select Defense & Aerospace Fund (FSDAX) has among its top holdings United Technology (UTX), Rockwell Collins (COL), Boeing, Honeywell (HON) and Goodrich (GR).

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