Investors are always looking to buy the best defensive stocks. Investing in defense stocks provides stability during uncertain times due to their reliable government contracts. Of course, such stability can be overlooked, when growth stocks are running as they have been of late.
That said, there’s always room in a well-structured long-term portfolio for stable, defensive, dividend-paying stocks. The three companies on this list below each exhibit these characteristics. With the exception of pick #1, which receives dividends from its core holdings, but doesn’t pay them out.
Thus, with the lingering effects of the 2022 bear market and investor apprehension continuing, here are three top defensive stock picks that I think are worth holding onto for the long-term.
Berkshire Hathaway (BRK-A, BRK-B)
Warren Buffet’s global conglomerate Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) has achieved impressive growth over the years. With a market capitalization of $744 billion, some speculate that the stock could eventually reach $1 trillion. However, reaching such a milestone would require significant growth for one of the top stocks in terms of market value.
With its solid track record and wide-ranging holdings, many investors find Berkshire’s stability appealing. Especially when considering the volatile nature of other stocks.
While it’s difficult to predict exactly when Berkshire will reach the $1 trillion mark, it has already made significant progress toward that milestone. The company’s carefully curated portfolio positions it well for future growth and potential success.
Johnson & Johnson (JNJ)
As global health spending per person is projected to rise significantly by 2050, Johnson & Johnson (NYSE:JNJ) emerges as a key player in the pharmaceutical and MedTech industries. Despite recent underperformance due to sector rotation, drug pricing provisions and talc lawsuits, JNJ remains a prominent player in the healthcare sector.
Johnson & Johnson’s pharmaceutical division accounts for a significant portion of its revenue, with a 7% increase in sales in the first quarter 2023. Key drugs like Stelara and Darzalex contribute to its impressive growth.
The company’s spin-off of its consumer wellness arm, Kenvue, has streamlined its structure and is expected to increase the valuation of both entities. With a strong dividend yield and substantial free cash flow, Johnson & Johnson remains a dominant player in the healthcare industry.
Duke Energy (DUK)
Duke Energy (NYSE:DUK) is a leading energy holding company with a significant electric generating capacity. Despite its recent performance, Duke remains a top dividend-paying large-cap stock. With a natural monopoly in the utility sector, Duke benefits from high barriers to entry for competitors.
Although there is room for improvement in its financial metrics, Duke maintains consistent profitability. This has helped analysts come to a moderate buy consensus on DUK, with a projected 22% upside potential.
Duke Energy may not have had a stellar start, but it ranks among the top large-cap stocks for dividend payouts. With a market capitalization of around $71 billion, Duke benefits from its natural monopoly in the utility sector, deterring potential competitors.
The company offers a forward yield of 4.39% and has increased its dividends for 18 consecutive years. This makes Duke a strong choice for patient investors seeking high-yield dividend stocks.
On the date of publication, Chris MacDonald has a position in BRK-B. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
