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Defensive stocks are a prudent choice for investors seeking to mitigate risks associated with market fluctuations. These stocks typically belong to companies that provide essential goods or services, ensuring consistent earnings and dividends, even during economic downturns. As a result, defensive stocks are synonymous with stability and act as a safeguard against sometimes erratic nature of markets. This means that they can often outperform the market during recessions while providing a steady dividend yield​.

The bottom line is that defensive stocks are a cornerstone for achieving a balanced and risk-averse portfolio. Their inclusion can help investors navigate through turbulent times, preserving capital while providing a steady income stream.  The following are 10 of the best defensive stocks for weathering market volatility.

1. Procter & Gamble

(PG )

Procter & Gamble (P&G) is often considered a good defensive stock due to its business model and financial stability. With a diverse range of consumer products, Procter & Gamble offers recession-proof essentials that are always in demand.

Procter & Gamble (P&G) is a multinational consumer goods corporation, specializing in a broad spectrum of products including cleaning products, detergents, air fresheners, toilet paper, baby care products, and personal care items like shampoos, razors, toothbrushes, and toothpaste among others​.

Source: X @ProcterGamble

Financial Metrics (as of October 2023):

Market Cap: Procter & Gamble has a market capitalization of $344.71 Billion, making it one of the most valuable companies globally.

Price to Earnings (P/E) Ratio: 24.05

Earnings Per Share (EPS): $6.16

Some of its well-known brands include Clorox, Tide, Mr. Clean, Charmin, Febreze, Dawn, Puffs, Swiffer, Bounty, and Microban​.  Procter & Gamble’s robust portfolio of essential consumer goods, its significant market capitalization, and stable financial metrics contribute to its reputation as a defensive stock. The diversity and necessity of its product offerings help ensure a steady demand, which is a hallmark of a defensive stock.

2. Johnson & Johnson

(JNJ )

A leader in healthcare, Johnson & Johnson’s broad spectrum of products and pharmaceuticals provides a stable revenue stream, resulting in it often being viewed as a good defensive stock.  It’s an American company specializing in pharmaceuticals, consumer health, and medical technologies, with its headquarters in New Brunswick, New Jersey.

Source: X @JNJNews

Financial Metrics (as of October 2023):

Market Cap: Johnson & Johnson has a market capitalization ranging from $395.81 Billion, making it one of the most valuable companies globally.

Price to Earnings (P/E) Ratio: 11.32

Earnings Per Share (EPS): $13.47

Johnson & Johnson was originally founded in 1886 by three brothers and is involved in the production and sale of products across various therapeutic areas like immunology, oncology, infectious diseases, as well as products for oral care, baby care, beauty, over-the-counter medicines, women’s health, and wound care. The company distributes its products to retailers, wholesalers, healthcare professionals, hospitals, and consumers.

The diverse range of healthcare products and services that Johnson & Johnson provides make it a defensive stock since these products and services are always in demand, irrespective of the economic situation.

3. Walmart

(WMT )

Walmart (WMT) is considered a good defensive stock due to its consistent performance, vast retail network, and the essential nature of its products on offer.  Walmart is also the world’s largest company by revenue, with US$ 548.743 billion reported in 2020. It is also the largest private employer globally, with 2.2 million employees. The company is publicly traded but controlled by the Walton family.

Source: X @Walmart

Financial Metrics (as of October 2023):

Market Cap: Walmart has a market capitalization of $432.80 Billion, making it one of the most valuable companies globally.

Price to Earnings (P/E) Ratio: 30.94

Earnings Per Share (EPS): $5.20

The retail giant operates through several formats, including grocery stores, supermarkets, hypermarkets, department and discount stores, and neighborhood markets. Its stores offer a variety of products at everyday low prices spanning groceries, health and wellness, technology, office supplies, apparel, and home goods among others.

Walmart’s network of stores is vast, with over 4,700 stores in the United States (5,300 including Sam’s Club) and over 10,000 stores globally, which significantly contributes to its defensive stock status due to its widespread market presence.  This expansive retail network, along with diversified product offerings and consistent financial performance, contribute to its reputation as a defensive stock.

4. PepsiCo

(PEP )

PepsiCo (PEP) is seen as a solid defensive stock, given its diverse portfolio of food and beverage products that are in continuous demand.  PepsiCo is a multinational food and beverage company that operates in over 200 countries and houses several well-known brands including Pepsi-Cola, Frito-Lay, Gatorade, Quaker, and Tropicana.

Formed in 1965 through the merger of the Pepsi-Cola Company and Frito-Lay, Inc., PepsiCo has grown into one of the largest consumer product companies globally, with a significant share in the carbonated soft drink market. The company has seven segments covering various regions and products like snacks, dips, cheese-flavored snacks, and soft drinks.

Source: x @pepsi

Financial Metrics (as of October 2023):

Market Cap: PepsiCo’s market capitalization is reported to be $221.41 Billion, placing it among the highly valued companies in the world.

Price to Earnings (P/E) Ratio: 26.86

Earnings Per Share (EPS): $6.00

As a corporation, PepsiCo encompasses all aspects of the food and beverage market including manufacturing, distribution, and marketing of its products. Its operations are globally spread and its product portfolio is quite diversified, making it a leading player in the food and beverage sector​.

The diversity in PepsiCo’s product portfolio coupled with its widespread global presence helps ensure a steady demand for its products. This and its substantial market capitalization and favorable financial metrics like a reasonable P/E ratio and EPS contribute to its status as a defensive stock.

5. The Coca-Cola Company

(KO )

The Coca-Cola Company is an American multinational corporation founded in 1892, known primarily for its flagship product, Coca-Cola. It manufactures and sells syrup and concentrates for Coca-Cola, which has become a cultural institution in the United States and a global symbol of the country’s tastes.

The Coca-Cola Company (KO) is considered a defensive stock due to its long-standing presence in the beverage industry and the consistent demand for its wide range of products. With its headquarters in Atlanta, GA, and over 200 bottling partners worldwide, Coca-Cola is a key global player in the beverage industry.

Source: X @CocaCola

Financial Metrics (as of October 2023):

Market Cap: The market capitalization of The Coca-Cola Company is reported to be $235.24 Billion, highlighting its substantial size and value in the market.

Price to Earnings (P/E) Ratio: 22.4

Earnings Per Share (EPS): $2.43

Besides Coca-Cola, the company also manufactures, sells, and markets other non-alcoholic beverage concentrates, syrups, and alcoholic beverages. It’s a total beverage company with products sold in over 200 countries and territories, hosting multiple billion-dollar brands across various beverage categories worldwide.

The Coca-Cola Company’s robust global presence, diversified beverage portfolio, and solid financial metrics contribute to its status as a defensive stock. Its products enjoy consistent demand, which helps ensure a steady revenue stream.

6. Verizon Communications

(VZ )

Verizon Communications (VZ) is known for its resilient business model and consistent demand for its services, which is why it’s often regarded as a defensive stock.  Verizon Communications was established on June 30, 2000, and is one of the world’s leading providers of technology and communications services. The company is headquartered in New York City with a global presence. In 2022, Verizon generated revenues of $136.8 billion.

Source: X @Verizon

Financial Metrics (as of October 2023):

Market Cap: The market capitalization of Verizon Communications is reported to be $133.73 Billion.

Price to Earnings (P/E) Ratio: 6.36

Earnings Per Share (EPS): $5.00