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Defensive stocks are those that tend to hold up better than the rest of the market during a downturn. While there’s no guaranteed way to predict which stocks will outperform in a recession, there are certain characteristics that make some stocks more defensive than others. Defensive stocks tend to be large, well-established companies with diverse product lines, strong balance sheets, and solid cash flow. Some examples of the top defensive companies in the stock market today are names like Costco Wholesale Corporation (NASDAQ: COST), and The Coca-Cola Company (NYSE: KO). In the last year of trading shares of both companies are up over 15% and 10% respectively.
These companies are often less reliant on consumer spending, and they tend to have more predictable earnings streams. As a result, defensive stocks can provide some stability during a market downturn. While they may not outperform the rest of the market in a bull market, defensive stocks can help to cushion the blow when the market turns south. With that being said, here are three defensive stocks to watch in the stock market now.
First, General Electric (GE) is an American multinational corporation headquartered in Boston, Massachusetts. GE has a wide range of businesses, including power generation, renewable energy, aviation, healthcare, and finance. GE has been credited with developing the first commercially viable light bulb and the first trains powered by electricity. Today, the company focuses on recent initiatives focused on developing clean energy sources and improving healthcare technology. As of today, GE stock has a current annual dividend yield of 0.43%.
Just last week, the company announced it will be unveiling its Grid Technology Innovations at CIGRE 2022. Specifically, the company will be presenting the world’s first SF6-free g3 circuit-breaker for 420 kV gas-insulated substations (GIS). These technologies will show the value of combining hardware with digital technologies to tackle customers’ needs. As well as to adapt to a more digitalized, decentralized, and decarbonized energy landscape.
“For the first time in more than 100 years, the global energy landscape is undergoing a massive transformation. To support this transition while building a grid that will be sustainable for the next hundred years, we are working closely with our customers to continue to find ways to make the grid more efficient, resilient, and sustainable,” stated Vera Silva, Chief Technology Officer at GE Grid Solutions. As of Tuesday’s closing bell, shares of GE stock are trading at $75.13. Given all this, is now the time to add GE stock to your long-term portfolio?
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Next, FedEx Corporation (FDX) is an American multinational delivery services company headquartered in Memphis, Tennessee. FedEx Corporation is one of the largest delivery companies in the world, with a global reach that extends to more than 220 countries and territories. In addition to its core express delivery business, FedEx also offers a range of other services, including ground shipping, freight shipping, and print and copy services. Currently, FDX has an annual dividend yield of 2.15%.
In July, the company reported its Q4 2022 financial results. In detail, FedEx reported revenue of $24.4 billion, an increase from $22.6 billion in the same period, in 2021. Additionally, it notched a quarterly net income of $1.8 billion, or $6.87 a share. For context, this represents an increase from $1.36 billion or $5.01 per share a year prior. FedEx CEO Raj Subramaniam said that moving forward, the company will be focusing on lowering costs, and revenue quality. All in all, will you be watching FDX stock this week?
Rounding off the list, United Parcel Services (UPS) is a package delivery company that offers a wide range of services, including air and ground shipping, freight forwarding, and warehousing. Currently, UPS is one of the largest companies in the world. For a sense of scale, the company has a vast network of air, ground, and ocean transport capabilities. Given its size and reach, UPS is often considered a bellwether for the global economy, and its stock price is closely watched by investors. Currently, the company has an annual dividend yield of 3.12%.
In July, the company reported its Q2 2022 financial results. In the report, UPS notched earnings per share of $3.29, with revenue of $24.8 billion for the quarter. This was a beat versus wall street analysts’ consensus estimate of earnings of $3.14 per share and revenue of $24.6 billion. Also, UPS was able to increase revenue by 5.7% during the same period, a year prior. Separate from that, the company also announced its regular dividend of $1.52 per share. Considering all this, is UPS on your list of defensive stocks to watch now?
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