7 Defensive Stocks with Strong Growth Opportunities

There are few sure things among retail stocks, but Walmart Inc. (NYSE: WMT) is a notable exception. In fact, the company may epitomize the idea of a defensive stock. The company’s business model, which focuses on delivering “everyday low prices,” attracts a loyal customer base who rely on making their dollars go further under any circumstances. 

However, Walmart hasn’t rested on its considerable laurels. Instead, the company has expanded into e-commerce with its Walmart+ program. Walmart is also taking a lead role in the trend toward inventory efficiency through robotics and automation that will drive future earnings growth.  

And Walmart’s investments in its business don’t come at the expense of its robust free cash flow or its commitment to increasing shareholder value. The company does that through regular share repurchases and regular dividends. In fact, Walmart is part of an exclusive group of companies known as Dividend Kings that have increased its dividend for at least 50 consecutive years.  

Costco Wholesale Corporation (NASDAQ: COST) is another winner in the retail sector. The company’s business model centers around keeping its loyal membership base, and that’s reflected in a retention rate that stays above 90%. Every year, those membership/renewal fees go almost directly to Costco’s bottom line. 

In 2024, Costco increased its membership fee for the first time in seven years. The company has committed to continuing to add brick-and-mortar locations and expand its e-commerce business.  

Over the past five years, COST stock has delivered a total return of over 209%. But before you dismiss this as an anomaly, you have to consider that over the last 20 years, COST stock has delivered a total return of over 1,800%.  

That’s the kind of consistency that long-term investors look for with any stock, defensive or not. And as part of that return, investors get a generous dividend that has increased for the last 21 years.  

Oil stocks are notoriously cyclical stocks. Still, many big oil stocks like Chevron Corporation (NYSE: CVX) are among the best defensive stocks that you can have in your portfolio. One reason is that oil companies continue to get increasingly efficient. That means they can deliver profitable earnings even if the price of crude oil falls below $60 a barrel. And when it starts to cross $80 a barrel, the earnings come in like a gusher.  

There are many oil stocks to choose from, but few have the balance sheet that Chevron brings to bear. The company can invest $22 billion annually from its internal cash flow, even with depressed oil prices.  

The company also continues to invest in the business. Its acquisition of Hess Corporation (NYSE: HES) is likely to be finalized in 2025, and the company will increase its capital investments. All of this can be done without any concerns about its dividend, which the company has increased for 37 consecutive years as of January 2025.

The biopharmaceutical sector can be volatile, but AbbVie Inc. (NYSE: ABBV) stands out as a safe harbor in any market storm. This is a sector that capitalizes on the aging of America which is creating a demographic shift that will only grow in the coming decade.  

Since separating from its parent company, Abbott Laboratories (NYSE: ABT) in 2013 to focus exclusively on branded biopharmaceutical products, the company’s revenue and earnings have been anchored by its blockbuster drug, Humira. And with drugs like Rinvoq and Skyrizi now firmly seeded in the market along with a robust clinical pipeline, investors should have little concern about the stability of revenue and earnings in the future. 

AbbVie is another Dividend King on this list. However, one way that ABBV stands out among other defensive stocks is its high-yield dividend. As of early 2025, the yield was 3.69%, and the average annualized three-year growth rate for the dividend was 6.04%, nearly double that of inflation.  

The Home Depot (NYSE: HD) is another exceptional defensive stock that investors can own for future growth. It also illustrates another benefit to owning these reliable stocks. That is, you can employ a dollar cost averaging (DCA) strategy and buy shares regardless of what’s happening in the stock’s sector. 

That’s important because the housing market is notoriously cyclical. And the period from 2020 through 2024 has made that crystal clear to investors. However, it’s also pointed out the many levers that home improvement companies like Home Depot can employ. That includes tapping both the DIY and the contractor channels. 

When you own HD stock, you get a company with strong free cash flow that the company uses, in part, to fund a reliable dividend, which has increased for 15 consecutive years through 2024. In early 2025, the yield on HD stock was 2.31% and has a $9 payout per share.  

In 2015, Chipotle Mexican Grill Inc. (NYSE: CMG) was a defensive stock of a different variety. That is, the company was playing defense to withstand the negative impact on revenue and earnings that came from an E. coli outbreak. But the company not only survived the crisis, it’s thriving to the point where the company issued a 50-for-1 stock split in 2024. 

Chipotle has become the market share leader in the growing fast casual space. The company’s loyal customer base has come to appreciate Chipotle’s business model which includes fresh ingredients made every day. The company is also a digital play as the company is successfully making use of its Chipotlane mobile order pickup windows. 

Chipotle is the only stock on this list that doesn’t pay a dividend. With impressive growth over the past 10 years, it hasn’t needed one. However, with a stock split in the books and the company’s free cash flow growing at an impressive rate, that may be something that Chipotle offers in the future.  

Union Pacific Corporation (NYSE: UNP) presents investors with a heads you win, tails you still win scenario. The business of commerce endures through both strong and weak economies. If you're a trader, then your decision to own UNP stock will depend on how strong or how weak you believe the economy is.  

But for long-term investors, this is an example of a stock that allows you to sit back and enjoy the ride. Union Pacific’s network of railroads spans 23 states and plays a central role in transporting a range of commodities. This helps provide stable revenue and operating margins even when the economy is in a downturn. 

Over the next several years, oil prices are likely to trend higher, and most analysts believe that the Fed will lower interest rates at least a few times. Both of those events will be bullish for Union Pacific. Even if the economy continues to tread water or gets weaker, investors who take a position now can collect a dividend that has been growing for 18 consecutive years.