In this article, we will look at the 10 Best Defensive Stocks to Buy in a Volatile Market.
Investor positioning in defensive stock is at its lowest level it has ever been since 2000. The decline is in stark contrast to the trade policy turmoil and economic uncertainty triggered by the US tariff war. Amid the disparity, Bank of America strategists, led by Michael Hartnett, insist it is high time for investors to become defensive.
Sharing similar sentiments is Trivariate Research founder Adam Parker, who insists investors should look to play defense with equity markets at all-time highs amid heightened volatility. According to Parker, investors should consider purchasing certain dividend stocks to generate passive income.
“We think companies with consistent dividend growth are likely to provide strong defense if there’s a growth scare. We think companies with consistent dividend growth are likely to provide strong defense if there’s a growth scare,” Parker wrote,” Parker wrote.
While the prospects of a bear market are still low, KGI securities warn that there could be a significant earnings decrease in the third quarter. Consequently the research firm insists investors should focus on defensive and high-quality stocks that are less sensitive to economic fluctuations. Consumer defensive stocks stand out because they provide goods and services that consumers cannot live without regardless of the prevailing economic situation.
With that in mind, let’s look at the 10 Best Defensive Stocks to Buy in a Volatile Market.
A portfolio manager analyzing a stock chart, seeking to find the right investments.
Our Methodology
To create our list of the 10 Best Defensive Stocks to Buy in a Volatile Market, we began by screening U.S.-listed companies with market capitalizations exceeding $2 billion, focusing on key defensive sectors such as consumer staples, healthcare, utilities, telecom, real estate, and pharmaceuticals. We then applied three key filters: a beta below 1, consistent EPS growth over the past three years and projected next year, and a dividend yield above 1%. Finally, we identified the most favored stocks among elite hedge funds and ranked them by the number of funds holding positions.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. Diageo plc (NYSE:DEO)
Beta as of July 8: 0.28
Dividend Yield as of July 8: 4.10%
Number of Hedge Fund Holders: 39
Diageo PLC (NYSE:DEO) is one of the 10 best defensive stocks to buy in a volatile market. On June 30, the company’s Casamigos brand unveiled its first-ever ready-to-drink (RTD) margarita variety pack. Casamigos Margaritas is the new non-carbonated cocktail made with tequila, natural flavors, and real juice.
Casamigos Margaritas paves the way for Diageo to expand its footprint into the high-growth RTD tequila market. The RTD segment is experiencing double-digit growth as tequila-based options remain in strong demand.
The new brand will expand the company’s premium portfolio, enabling it to capitalize on several converging trends.
“Tequila-based ready-to-drink cocktails are driving the next wave of growth in the category, and consumers are looking for trusted brands that deliver both quality and convenience,” said Jamie Young, VP of Ready to Drink and Ready to Serve at Diageo. “With Casamigos Margaritas, we’re bringing a premium experience into the can—backed by the cultural credibility that set this brand apart.”
Diageo PLC (NYSE:DEO) engages in the production, marketing, and sale of alcoholic beverages. It offers scotch, gin, vodka, rum, raki, liqueur, wine, tequila, and Chinese white spirits, among others.
9. The Hershey Company (NYSE:HSY)
Beta as of July 8: 0.28
Dividend Yield as of July 8: 3.30%
Number of Hedge Fund Holders: 40
The Hershey Company (NYSE:HSY) is one of the 10 best defensive stocks to buy in a volatile market. On June 30, the company confirmed it will remove synthetic dyes from all its snacks by the end of 2027. The decision will allow the company to align with directives by US health authorities.
US Health Secretary Robert F. Kennedy Jr. and FDA Commissioner Marty Makary have already rolled out directives requiring companies to remove synthetic food dyes from the food supply chain. The directive is part of the ministry’s push to address health conditions such as ADHD, obesity, and diabetes.
Some of Hershey’s brands that will be affected by the directive include Dot’s Homestyle Pretzels, SKINNYPOP popcorn, and FULFIL protein bars. Other companies, including Tyson Foods and Conagra Brands, have also started reformulating their brands by removing artificial colors.
The Hershey Company (NYSE:HSY) engages in the manufacture and sale of confectionery products and pantry items.