Many investors still prefer stable, defensive stocks in 2022.
This summer, oil prices have rolled back and the S&P 500 has rallied from its recent lows. But many investors are still worried. There are signs that business and consumer spending are still weakening as we enter the all-important fourth quarter of the year, and reports of a cooling housing market and a growing threat of layoffs are counterbalancing any good news. Besides, many stocks are still down by double digits this year. Even if it’s “less bad” on Wall Street these days, many investors are still looking for a defensive approach right now. If that sounds like your preferred strategy, then consider one of these seven defensive stocks that should hang tough even in a bear market.
AbbVie Inc. (ticker: ABBV)
With a modest gain so far in 2022, while other stocks are deeply in the red, AbbVie has shown that it has staying power in a tough environment. Its strength this year is thanks in part to the fact that the pharmaceutical company has a strong lineup of current blockbuster drugs along with a thriving research pipeline to ensure it keeps numbers moving in the right direction. Industry estimates now predict that the $250 billion company will be the largest of all the Big Pharma stocks as soon as 2028. That means plenty of stability going forward, too, thanks to its unrivaled scale. The icing on the cake for low-risk investors is its 4% dividend that will keep the cash trickling in no matter what short-term trends appear.
Altria Group Inc. (MO)
“Sin stocks” like tobacco giant Altria are some of the best defensive investments you’ll find, as consumers hit hard by any downturn tend to rely on them to get through the tough times. Altria is behind many of the biggest brands in the space, including Marlboro cigarettes, Black & Mild cigars, and smokeless tobacco products Copenhagen and Skoal. Considering the well-known risks of these offerings coupled with the fact that they are addictive to those who use them, it’s hard to imagine anything disrupting baseline demand for tobacco in the near future. MO may not have breakneck growth ahead, but it’s a well-run company that has delivered more than 50 dividend increases over the last 50 years as proof of its reliability and income potential in any market environment.
Consolidated Edison Inc. (ED)
Investors looking for rock-solid investments frequently turn to utility stocks, as the publicly traded companies in this sector have wide moats against future competition and incredibly reliable demand. As a regional utility that serves the area around New York City, ConEd is even more stable than most of the stocks in this sector. It has a big base of 3.5 million electricity customers and another 1.1 million natural gas customers in the region that show consistent baseline demand in any economic environment. Secondly, ConEd is one of the oldest publicly traded utilities in America and has a 48-year track record of offering at least one dividend increase per year to shareholders. That means this is a stock that offers incredible stability regardless of other ups and downs on Wall Street.
Hershey Co. (HSY)
If you look at a chart of Hershey since mid-2018, it’s pretty much a steady upward climb — an amazing feat considering both the major disruptions caused by the pandemic as well as the chronic volatility of 2022. This speaks to both the low-risk nature of this consumer staples company and the well-run nature of its global confections business. Shares are up about 20% so far in 2022, due in part to a prediction of roughly 13% growth in both revenue and profits this fiscal year. Thanks to its many brands including Skinny Pop popcorn, Reese’s peanut butter cups, Jolly Ranchers candy and others in addition to its eponymous chocolate, there’s a great chance that HSY will continue to do well regardless of short-term trends on Wall Street.
Kinder Morgan Inc. (KMI)
Energy stocks can be a bit volatile based on variations in oil and gas prices. However, KMI is insulated from these ups and downs and offers a generous dividend as an additional hedge against declines. As a “midstream” play focused on energy infrastructure, Kinder Morgan is focused on transporting and storing energy instead of drilling for oil. That translates to a more stable business model. In 2015, KMI was caught unprepared for oil price volatility and was forced to slash its dividend — an event that seriously weighed on shares. That was bad news for investors, but now that KMI shares have settled into a more sustainable range, the company is paying a 5.9% dividend that should be easier to manage if times get tough again.
M&T Bank Corp. (MTB)
Bank stocks burned some investors more than a decade ago when the mortgage crisis gutted once-stable financial firms — and some, like megabanks Citigroup Inc. (C), are still well below their prior peaks. But regional bank M&T is a “goldilocks” financial stock that is neither too big to be involved in aggressive investment banking, nor too small with its $33.4 billion market cap. That means it should do very well regardless of what the market throws at it — particularly in this rising interest rate environment that allows it to make more money off its core lending business. M&T has almost 700 locations from West Virginia to Connecticut to Washington, D.C., and is one of the rare stocks that has actually posted healthy gains since the start of 2022 — proof of its stability in a rough environment.
Ventas Inc. (VTR)
Ventas is a $20 billion real estate company that focuses on health care properties such as doctor offices, hospitals or senior living communities. It currently operates a massive portfolio of more than 1,200 properties, giving it a wide reach. The recession-proof medical sector in the U.S. should see strong earnings regardless of consumer spending trends. To further build on its track record of success, VTR completed its acquisition of senior housing firm New Senior Investment Group Inc. in 2021. That will help ensure ample cash to support its 3.6% dividend as well as future growth.
7 best defensive stocks in a bear market:
— AbbVie Inc. (ABBV)
— Altria Group Inc. (MO)
— Consolidated Edison Inc. (ED)
— Hershey Co. (HSY)
— Kinder Morgan Inc. (KMI))
— M&T Bank Corp. (MTB)
— Ventas Inc. (VTR)
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