In this article, we discuss the 12 best defensive stocks to buy right now.
A notable event influencing current market sentiment is the recent selloff in technology stocks, primarily driven by speculations surrounding China’s DeepSeek AI model. This incident has underscored the market’s fragility, with key indicators pointing to potential instability. For instance, heavy betting on US tech stocks and rising bond yields have made equities less appealing compared to government debts, challenging the equity risk premium. In this context, the importance of defensive stocks becomes increasingly evident. Defensive stocks, also known as non-cyclical stocks, are those that provide consistent dividends and stable earnings regardless of the state of the overall market. They are typically found in sectors such as utilities, consumer staples, and healthcare.
Read more about these developments by accessing 10 Best AI Data Center Stocks and 10 Buzzing AI Stocks According to Goldman Sachs.
For example, companies that produce or distribute essential goods like food, beverages, and hygiene products tend to maintain steady cash flow and predictable earnings during both strong and weak economies. Dividends play a crucial role in investment strategies, offering both immediate income and long-term financial benefits. They represent a portion of a company’s earnings distributed to shareholders, typically on a quarterly basis. Historically, dividends have been a substantial component of total returns in the stock market. According to S&P Dow Jones Indices, since 1936, dividends have accounted for more than one-third of the total equity return of the S&P 500, with capital appreciation making up the other two-thirds.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and Beyond the Tech Giants: 35 Non-Tech AI Opportunities.
For this article, we selected stocks that have solid businesses with recurring revenue streams, reliable dividend payouts, and burgeoning growth pipelines. These stocks are also popular among hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Stocks
Best Defensive Stocks To Buy Right Now
12. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders: 54
Colgate-Palmolive Company (NYSE:CL) makes and sells consumer products. The firm specializes in consumer staples, including oral care, personal care, and home care products. These everyday essentials maintain consistent demand regardless of economic conditions, ensuring steady revenue streams. The company has an extensive international presence that mitigates risks associated with regional economic fluctuations. Notably, Latin America accounts for approximately 25% of total sales for the business, providing a balanced revenue mix that enhances resilience against localized downturns. In the third quarter of 2024, the company reported net sales of $5.03 billion, a 2.4% increase from the same period in the previous year. This growth was driven by a 3.7% rise in overall volume, despite a 3.2% decrease in pricing in North America. The gross margin expanded by 260 basis points to 61.1%.
