Ecolab Inc. (ECL): Is This a Top-Notch Defensive Play?

Johnson & Johnson (NYSE:JNJ) has also benefited from consumer brand loyalty, and it yields an impressive 3.10%. Its profit margin is similar to Procter & Gamble’s — just north of 15%. This demonstrates good efficiency. And the debt-to-equity ratio for Johnson & Johnson is even more impressive at 0.24. The stock is a little more expensive at 24 times earnings, but when it comes to long-term, dividend-paying investments like these, current valuation shouldn’t be looked at as a major factor.

Both Procter & Gamble and Johnson & Johnson look like solid long-term investments. They also showed decent resiliency during the financial crisis of 2008/2009, with both stocks dropping approximately 25%.

Ecolab Inc. (NYSE:ECL) also declined approximately 25% at the time. This might sound like a significant drop, but it was actually much stronger than most stocks throughout the broader market, and the dividends were still being paid. Ecolab Inc. (NYSE:ECL) currently yields 1.10% — not as strong as Procter & Gamble or Johnson & Johnson (NYSE:JNJ). Ecolab relied more on debt to fuel growth, sporting a debt-to-equity ratio of 1.0.

Conclusion

All three companies offer solid long-term investments, but if you’re looking for a defensive play and they’re all equally resilient, then it would make sense to opt for higher yields and better debt management with Procter & Gamble and Johnson & Johnson. It would be difficult to go wrong either way.

The article Is This a Top-Notch Defensive Play? originally appeared on Fool.com and is written by Dan Moskowitz.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson and Procter & Gamble. The Motley Fool owns shares of Johnson & Johnson. Dan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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