Can't remember the last time you went to the grocery store and paid a reasonable price for steak, chicken, eggs, mayonnaise and cereal? It can wipe out your entire grocery budget in about a second.
Defensive stocks to the rescue. They can help you during high-inflation periods and downed cycles, typically offering a constant dividend and relatively stable earnings regardless of what the rest of the market is doing. (Think utilities and food — you can't stop paying your heating bill in the dead of winter any more than you can quit buying groceries.)
You can usually find defensive stocks in well-established companies that offer goods and services people will continue to need: household staples, utilities and healthcare.
Let's walk through the definition of defensive stocks and a few you might want to consider getting your hands on. We'll also work through the reasons you may want to consider defensive stocks before we identify three solid options that might make sense for your portfolio.
What Are Defensive Stocks?
Defensive stocks might not offer amazingly dramatic growth or giant dividends. You might also want to be careful not to overload on defensive stocks because guess what they'll do during a bull market? Right: If they outperform during a bear market, they'll underperform during a bull market.
You want to combine a healthy mix of value, income generation, new listings and defensive stocks to grow your nest egg. You may want to keep that scenario the same throughout all market rises and falls.
3 Defensive Stocks to Pad Your Portfolio
Which defensive stocks might you want to add to your portfolio? Check these out.
The Blackstone Group Inc., headquartered in New York, New York, provides investment and fund management services through its private equity, real estate, hedge fund solutions and credit segments. Blackstone Group serves institutional investors as well. Real estate offers a great defensive financial tactic, and building in real estate stocks can help defend your portfolio.
GAAP Net Income was $2.9 billion for the quarter and $12.4 billion for the year. GAAP Net Income Attributable to Blackstone Inc. was $1.4 billion for the quarter and $5.9 billion for the year.
In terms of fee-related earnings and distributable earnings in Q4 2021, Blackstone reached record levels for both the quarter and the year with fee-related earnings of $1.8 billion, up 144% year-over-year. Distributable earnings were $2.3 billion in Q4 2021, up 55% year-over-year.
Net accrued performance revenues totaled $8.7 billion, up 128% year-over-year, with a total AUM of $880.9 billion, up 42% year-over-year. The company noted inflows of $154.8 billion in the quarter and $270.5 billion for the year and will put out a dividend of $1.45 per common share, payable on February 14.
The ultimate in defensive stocks, Procter & Gamble Co. headquartered in Cincinnati, Ohio, delivers branded consumer packaged goods in several categories, including beauty, grooming, health care, fabric, home care, baby products, feminine products and family care. Its wide span of products range from razors to shave products and toothbrushes to baby wipes. Procter & Gamble's wide variety of products will always make it a prolific defensive stock.
Procter & Gamble reported second quarter fiscal year 2022 net sales of $21 billion, an increase of 6% over the prior year. Organic sales also increased 6% and diluted net earnings per share were $1.66, an increase of 13% versus prior year GAAP EPS and an increase of 1% versus prior year Core EPS. Operating cash flow was $5.1 billion for the quarter and adjusted free cash flow productivity was 106%. The company returned $7 billion of cash to shareholders via $2 billion of dividend payments and nearly $5 billion of common stock repurchases.
Procter & Gamble has paid a growing dividend and announced a 10% increase in our dividend — the 65th consecutive annual dividend increase and the 131st consecutive year in which Procter & Gamble has paid a dividend. For example, Procter & Gamble paid $1.97 per share in fiscal 2011 and grew to $3.24 in fiscal year 2021.
Bunge Ltd. NYSE: BG, headquartered in Chesterfield, Missouri, operates as a holding company for the supply and transportation of agricultural commodities through its various segments, including agribusiness, or the purchase, storage, transportation, processing and sale of agricultural and commodity products. Bunge's segments provide the backbone for many items that end up on grocery store shelves. It offers edible oil products (vegetable oils, shortenings, margarines and mayonnaise), milling products, which produces and distributes wheat flours, bakery mixes and corn- and rice-based products. Its sugar and bioenergy segments manufacture sugar and ethanol derived from sugar cane. Finally, the fertilizer segment produces and distributes fertilizer products for the agricultural industry.
In Q4 and in the final year 2021, Bunge had a full-year GAAP EPS of $13.64 versus $7.71 in the prior year and $12.93 versus $8.30 on an adjusted basis. The company had a Q4 GAAP EPS of $1.52 versus $3.74 in 2020 and $3.49 versus $3.05 on an adjusted basis.
Bunge’s operations shored up an outstanding Q4 and full-year performance throughout its value chains, and refined and specialty oils posted record Q4 and full year results. The company expects continued growth and favorable results in 2022.
Consider Defensive Stocks Now
You can think of defensive stocks as a life preserver in deep ocean waters. Defensive stocks offer significant benefits: long-term gains and potentially lower risk due to your investment in well-established companies. Defensive stocks might even corner the market as better investments than other stocks, even if they're less exciting than investing in, say, a company that has just had its initial public offering (IPO).
However, if you're looking for steady growth and companies that will turn in steady results, you'll want to consider defensive stocks and the ones on our list.
Before you consider Blackstone, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Blackstone wasn't on the list.
While Blackstone currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.
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