In the stock market, there are a variety of different types of stocks. One type to consider is known as defensive stocks. Defensive stocks can provide investors with a way to hedge against volatility in the stock market and reduce risk. But what exactly are defensive stocks and how do they work? Let’s take a closer look.
What Are Defensive Stocks?
Defensive stocks refer to companies that have steady, reliable earnings and strong balance sheets even during times of economic downturns. These companies tend to be large-cap firms with established products and services that are not easily disrupted by changes in the market or consumer preferences. Examples of defensive stocks include consumer staples such as food producers and retailers. As well as pharmaceuticals, utilities, and telecommunication services.
Investing in defensive stocks can offer several advantages for investors looking to mitigate risk while still earning returns from their portfolios. The most obvious benefit is that these securities tend to remain relatively stable over time. This comes even when other sectors experience swings in prices due to macroeconomic trends or specific industry events. This means that investors can rest assured knowing that their investments will not be significantly affected by short-term fluctuations in the market. Additionally, many defensive stocks pay dividends. This can provide income for investors during periods when other sources of income may be lacking.
Defensive Stocks To Buy [Or Avoid] In 2023
Procter & Gamble Company (PG Stock)
Leading off, The Procter & Gamble Company (PG) is an American multinational consumer goods corporation with a portfolio of over 65 iconic brands. Procter & Gamble has developed a wide range of products to serve diverse customer needs in the beauty, healthcare, grooming, and homecare categories around the world.
Last month, Procter & Gamble Company announced it will be holding a webcast on January 19, 2023, to discuss its second-quarter 2023 earnings results. The event will start at 8:30 a.m. ET and can be accessed by media and investors on the company’s investor website. The webcast will also be available for later playback. For a quick refresher, during Q1 2023, PG reported earnings of $1.57 per share, on revenue of $20.6 billion.
Meanwhile, looking at the last six months of trading action, shares of PG stock have rebounded by 4.74%. As of Tuesday morning, PG stock is trading at around $151.50 a share.
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Coca-Cola Company (KO Stock)
Second, we have The Coca-Cola Company (KO). The Coca-Cola Company is a multinational beverage company that is one of the largest producers and distributors of non-alcoholic beverages in the world. The company produces a variety of other non-alcoholic beverages, including juices, sports drinks, and teas.
In October, Coca-Cola reported strong financial results for the third quarter of 2022. The company earned $0.69 per share and had revenue of $11.1 billion for Q3 2022. Additionally, Coca-Cola’s revenue increased by 10.2% compared to the same period, the previous year.
As of today, KO stock offers its shareholders an annual dividend yield of 2.77%. Meanwhile, during Tuesday morning’s pre-market trading session, shares of KO stock are trading at around $63.48 a share.
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Walmart (WMT Stock)
Lastly, Walmart Inc. (WMT) is a multinational retail corporation that operates a chain of department stores, grocery stores, and discount department stores. Walmart operates a number of retail formats, including supercenters, supermarkets, and warehouse clubs. The company also operates an online retail platform, Walmart.com.
Last month, Walmart announced it has reached a settlement agreement with all 50 states, the District of Columbia, Puerto Rico, and three other U.S. territories to resolve opioid-related lawsuits that have been brought against the company. This settlement, which is worth $3.1 billion, will only take effect if a sufficient number of cities and counties also agree to participate. This announcement follows the company’s announcement on November 15th of its intention to reach a settlement with these entities.
Over the past six months, shares of Walmart stock have rallied back by 14.12%. In addition, during Tuesday morning’s pre-market trading action, WMT stock is trading at around $141.79 a share.
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