7 Defensive Stocks Built to Withstand the Market’s Worst Storms


  • Procter & Gamble (PG): P&G brings familiar consumer brands to the table.
  • Waste Management (WM): Waste Management does a dirty job that needs to get done.
  • Southern Company (SO): Southern Company benefits from a natural monopoly.
  • Read more about the top defensive stocks to buy and hold today!
Defensive Stocks - 7 Defensive Stocks Built to Withstand the Market’s Worst Storms

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While the equities sector experienced a bump higher for the week ending April 26, potential headwinds incentivize the case for defensive stocks to buy.

First and foremost, the geopolitical headlines don’t support continued bullishness. With tensions having already flared in the Middle East and a military conflict likely to worsen in Europe, these matters are not conducive to investor confidence.

Second, monetary policy is a huge talking point amid stickier-than-expected inflation. Plus, American consumers are stretching themselves to make ends meet, presenting a rough backdrop for overall economic stability. With that in mind, below are defensive stocks for concerned investors to consider.

Procter & Gamble (PG)

Procter & Gamble Union Distribution Center. P&G is an American Multinational Consumer Goods Company
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Procter & Gamble (NYSE:PG) makes a very strong case for defensive stocks. As a consumer goods manufacturer, it’s essentially relevant on a permanent basis. Technology isn’t going to improve to the point where brushing our teeth is no longer required.

Another point working in P&G’s favor is not only brand power but its generational effect. Many kids grew up watching their parents or guardians use P&G brands. It’s very possible that, as a function of habit, as these kids become adults, they’ll purchase the same brands.

On a financial note, the company is consistently profitable. It’s not exciting. However, P&G’s positive earnings beat over the last four quarters averages 6.55%. Looking to the end of fiscal 2024, experts anticipate earnings per share to hit $6.55. That’s up solidly from last year’s print of $5.90.

On the top line, they’re projecting revenue of $84.36 billion, up 2.9% from 2023’s haul of $82.01 billion. Combined with a forward dividend yield of 2.5%, PG is one of the top defensive stocks to buy.

Waste Management (WM)

person depositing a plastic water bottle in a yellow plastic recycling bin. The bin is in a line-up of several other blue and green bins.
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You don’t have to think too hard to understand why Waste Management (NYSE:WM) is a top-tier candidate for defensive stocks. A specialist in the namesake business, the company benefits from permanent relevance. No matter how advanced we become as a society, we will produce waste. That’s reality. That’s physics.

What’s more, land resources to provide waste solutions are of course limited. And as the U.S. becomes bigger population wise – through natural births and immigration – Waste Management (both the company and the industry) will become more critical. Further, because of the criticality, the business is entrenched.

Financially, the company is, as you might expect consistent. Yes, it missed its EPS target in the second quarter of 2023. However, over the last four quarters (inclusive of the Q2 miss), the average earnings beat came out to 7.43%. For fiscal 2024, experts are anticipating EPS to hit $6.96, above last year’s result of $6.19.

Lastly, the top line should expand 6.3% from last year to reach $21.72 billion. With a dividend yield of 1.43%, it’s another great idea for defensive stocks to consider.

Southern Company (SO)

the southern company logo displayed several times on a screen
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Natural monopoly – that’s the phrase to know when it comes to Southern Company (NYSE:SO). Falling under the utilities industry, Southern engages in the generation, transmission and distribution of electricity. It also develops, constructs and manages power generation assets, including renewable energy projects. Given the steep barriers to entry – including regulatory considerations – Southern dominates its core markets.

Fundamentally, this dominance should last for the long haul, providing comfort to conserved investors. Not only that, SO makes for a candidate for defensive stocks because of the indispensable nature of the underlying service. Both individuals and enterprises need electricity to survive and thrive. Therefore, Southern favorably occupies the lowest run of the trade-down effect. That just means customers will axe other expenditures before they axe critical utilities.

Not surprisingly, Southern is a consistent financial performer. In fiscal 2023, its average positive earnings surprise came out to 7.73%. For the current fiscal year, experts are projecting EPS to hit $4, a decent improvement over last year’s $3.65.

With a forward yield of 3.93%, SO is one of the defensive stocks to put on your radar.

Costco (COST)

A Costco Wholesale (COST) warehouse in Auburn Hills, Michigan.
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The case for Costco (NASDAQ:COST) as one of the defensive stocks comes down to relative economic insulation. Generally speaking, Costco members tend to generate higher incomes than shoppers of competing big-box retailers. Because of this higher income profile, COST should be able to better weather disruptions.

On a fundamental note, Costco provides all the essentials. Further, because of its business model of incentivizing bulk purchases, it could be a cynical inflation winner. If consumers anticipate the dollar’s value to be eroded in the future, there is an incentive to buy more products today. And since Costco shoppers make more money on average, I’d assume they are sophisticated enough to understand monetary policy dynamics.

Financially, Costco suffered a big miss in its quarter ended May 31, 2023. However, in the past three quarters, its average positive earnings surprise came out to 4.83%. For the current year, analysts are projecting EPS of $16.18 on revenue of $253.95 billion. Last year, the company posted EPS of $14.16 on sales of $242.29 billion.

Coca-Cola (KO)

KO stock PEP stock: a can of Coca-cola and a can of Pepsi on either side of a glass of brown soda and sitting on top of a pile of ice
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Under the context of defensive stocks, Coca-Cola (NYSE:KO) is a cynical gamble on consumer discretionary trends. Recent data on inflation noted that consumer prices have been elevated more than anticipated. That’s largely due to increases in energy prices – and those prices may not recede. Indeed, I anticipate that they will rise based on the current geopolitical framework.

Therefore, Coca-Cola could become a beneficiary of the trade-down effect. Right now, consumers may be comfortable forking over big bucks for their fancy lattes at their favorite coffee shops. However, should circumstances become more pressured, people may choose cheaper alternatives for their caffeine. That’s where the famous beverage maker could rise above the muck.

To be sure, the company isn’t exactly providing the thrills. Still, in the past four quarters, the average earnings surprise came out to 5.23%. By the end of this fiscal year, experts are looking for EPS to hit $2.81, above the prior year’s $2.69.

Average consensus revenue calls for $45.85 billion, which is only at parity with 2023’s haul. However, the trade-down effect could push sales to the higher end of the estimated spectrum at $46.85 billion.

Abbott Laboratories (ABT)

Close up of Abbott Laboratories sign at their headquarters in Silicon Valley
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Abbott Laboratories (NYSE:ABT) makes an ideal case for defensive stocks because of its alignment with the always-relevant healthcare industry. Abbott of course is a powerhouse in the field. Per its public profile, the company operates in four segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products and Medical Devices. The company provides a range of solutions that are too numerous to list here.

With Abbott, the bottom line is, well, the bottom line. In the past four quarters, the company’s average earnings surprise came out to 2.43%. No, it’s not lighting up the board by any means. However, defensive stocks have always been about delivering the goods irrespective of outside circumstances. That’s what Abbott does.

For fiscal 2024, analysts are looking for EPS of $4.63. That’s a solid step up from last year’s print of $4.44. On the revenue front, they’re targeting $41.74 billion, a 4.1% lift from 2023’s tally of $40.11 billion. Combined with a forward yield of 2.05%, ABT should be on your radar.

Realty Income (O)

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Structured as a real estate investment trust, Realty Income (NYSE:O) is one of the riskier ideas among defensive stocks. Since the start of the year, shares slipped more than 8%. In the past 52 weeks, they’re down almost 15%. Still, the REIT commands a massive retail footprint, with tenants from myriad industries.

Put another way, unless you envision a future where people no longer go to hardware stores or the local pharmacy to pick up their prescription drugs, Realty Income should benefit from permanent relevance. In fairness, the REIT’s financial performance has been all over the map last fiscal year. Its quarterly surprise came out to 3.63% below breakeven.

However, analysts believe that fiscal 2024 could see Realty deliver EPS of $1.53. If so, that’s a significant boost from last year’s $1.26. Also, revenue could soar to $4.94 billion, up 21% from 2023’s haul of $4.08 billion.

What may do it for investors, though, is the dividend. With a yield of 5.74%, it’s very attractive. Plus, it pays out monthly.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

Article printed from InvestorPlace Media, https://investorplace.com/2024/04/7-defensive-stocks-built-to-withstand-the-markets-worst-storms/.

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