NEW YORK (CNN/Money) - Defense contractors Northrop Grumman and General Dynamics posted improved quarterly profits Wednesday as one of the year's best-performing sectors continued to benefit from increased government spending on bombers, missiles and tanks.

Northrop, which makes the B2 Bomber, reported second-quarter net income of $182 million, or $1.53 per share, compared with $114 million, or $1.28 per share, for the same period last year.

The results easily beat analysts' estimates of $1.46 per share, according to First Call.

Sales increased 20 percent to $4.4 billion for the quarter.

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General Dynamics, which makes submarines, tanks and destroyers, said second-quarter earnings rose to $263 million, or $1.29 per share, from $227 million, or $1.12 per share, in the same period last year.

That topped the consensus forecast of $1.27 per share provided by analysts surveyed by First Call.

Sales rose to $3.51 billion from $2.96 billion.

"Most of the [government] spending has been in the backlog for these companies, and it's just going to start flowing through the earnings statements. I think there is further upside," Robert Norfleet, analyst at Davenport & Co, told Reuters.

Investors have poured into defense stocks since September in a bet they will benefit from money spent in the war on terror. That bet's largely paid off, though Northrop and General Dynamics pulled back Wednesday.

Shares of Northrop (NOC: up $1.53 to $110.03, Research, Estimates) slipped, narrowing their year-to-date gain to 11 percent. Up 12.5 percent on the year, General Dynamics (GD: down $7.61 to $90.16, Research, Estimates) were down 7 percent Wednesday afternoon.

Rival Raytheon (RTN: down $0.12 to $34.88, Research, Estimates) was scheduled to report second-quarter results after the market closed, while Lockheed Martin's (LMT: up $2.00 to $60.00, Research, Estimates) numbers are due Thursday.  

--from staff and wire reports