13 Best Defensive Dividend Stocks for 2026

In this article, we will take a look at the 13 Best Defensive Dividend Stocks for 2026.

On February 26, CNBC reported that Warren Pies, founder of 3Fourteen Research, believes the stock market may be showing some concerning signals beneath the surface.

Speaking on CNBC’s Closing Bell, he pointed to a noticeable split in sector performance. Over the past quarter, consumer staples and energy stocks have each gained more than 10% through Feb 23. At the same time, financials and technology stocks have moved lower. Pies said this kind of divergence has appeared only twice before. One instance came in 1990 after Iraq invaded Kuwait. The other occurred in 2000 during the collapse of the dot-com bubble. In both periods, the broader market struggled afterward. Data from those episodes shows the S&P 500 declined an average of 6.9% over the following two quarters. The index slipped 2.1% after the 1990 divergence and fell 11.6% after the 2000 event.

Pies added that the market seems to have lost momentum. It has been trading in a relatively narrow range while going through what he described as an unhealthy sector rotation. Energy and consumer staples have been the strongest performers this year. Energy stocks have climbed nearly 23% since the start of the year through the third week of February, making the sector the top performer in the S&P 500. Consumer staples have also moved higher, gaining almost 15%.

Despite those signals, Pies said he still expects the market to finish the year higher. He pointed to the possibility that the Federal Reserve could cut interest rates in 2026. He also noted that corporate earnings may grow by at least 10%. Historically, that combination has not aligned with a down year for the market.

Even so, he stressed that technology stocks would likely need to lead the next leg of any rally. That leadership has not appeared yet. Through Feb 23, the S&P 500 technology sector was down more than 4% for the year, while financials had fallen 7.7%, making them the weakest-performing sector so far.

Given this, we will take a look at some of the best dividend stocks.

Our Methodology:

For this list, we screened for dividend companies from defensive sectors, such as consumer staples, healthcare, and energy/utilities. These stocks are also popular among hedge funds. We limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment.

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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).

13. Nomad Foods Limited (NYSE:NOMD)

Number of Hedge Fund Holders: 32

On March 3, Mizuho lowered its price recommendation on Nomad Foods Limited (NYSE:NOMD) to $13 from $15. It reiterated an Outperform rating on the shares. The firm described the company’s outlook as “disappointing” and said it reduced its estimates following the latest earnings report.

Nomad Foods reported its fourth-quarter results on February 26. Full-year performance came in line with the guidance the company issued in August 2025. Organic revenue declines eased in the fourth quarter compared with the third quarter. Retail sales rose 0.7% year over year, an improvement from the 0.4% growth recorded for the full year. The company also advanced its productivity initiatives. Cost-of-goods savings reached a multi-year high in 2025.

Cash generation remained strong throughout the year, which allowed Nomad to return €287 million to shareholders through dividends and share repurchases. That figure marked a 38% increase compared with 2024. Management indicated that fiscal 2026 will serve as a transition year. The company plans to implement several changes designed to strengthen the organization, improve core operating performance, and unlock long-term value. In the fourth quarter of 2025, reported revenue declined 2.6% to €773 million. Organic revenue fell 1.3%, including a 1.1% drop in volumes.

Reported diluted EPS shifted from a profit of €0.32 per share in the prior year to a loss of €0.07 per share. The decline reflected €0.39 per share in after-tax losses tied to debt refinancing during the quarter. Adjusted EPS increased 2.4% to €0.43.

Nomad Foods Limited operates as a frozen food company. Its portfolio includes brands such as Birds Eye, Findus, iglo, Ledo, and Frikom. The company focuses on frozen food categories, including fish, vegetables, poultry, meals, pizza, and ice cream.

12. Brown-Forman Corporation (NYSE:BF-B)

Number of Hedge Fund Holders: 39

On March 5, Morgan Stanley lowered its price recommendation on Brown-Forman Corporation (NYSE:BF-B) to $27 from $29. The firm reiterated an Underweight rating on the shares. The analyst argued that structural headwinds in the alcohol industry, an oversupply of American whiskey, and the prospect of stronger competitive pressure are weighing on the company’s outlook. At the same time, rising costs are adding to what the firm views as a difficult topline environment.

During the earnings call for fiscal Q2 2026, CEO Lawson Whiting said reported net sales for the first nine months declined 2%. After adjusting for certain items, organic net sales were essentially flat over the same period. He noted that growth remained strong in emerging international markets, which rose 15%. Travel Retail sales increased 7%, supported largely by performance in Mexico and Brazil.

Whiting also pointed to the launch of Jack Daniel’s Tennessee Blackberry in the US and Europe. He said the product ranked as the second-largest new offering by value across the total distilled spirits category based on Nielsen data. He also mentioned the U.S. debut of New Mix, saying it could develop into another growth driver and noting that early results appeared to be off to a strong start. The CEO added that the company ended its partnership with Pabst Brew & Company for Jack Daniel’s Country Cocktails. He said the decision was part of a broader effort to bring the strategy for the flavored malt beverage portfolio under a more centralized direction.

Brown-Forman Corporation manufactures, distills, bottles, imports, exports, markets, and sells a range of beverage alcohol products under various brands. The company has built a portfolio of more than 40 brands across spirits, ready-to-drink (RTD) cocktails, and wine.

11. Cal-Maine Foods, Inc. (NASDAQ:CALM)

Number of Hedge Fund Holders: 43

On March 2, Cal-Maine Foods, Inc. (NASDAQ:CALM) announced it had acquired the shell egg, egg products, and prepared food assets of Creighton Brothers LLC, including Crystal Lake LLC. The total purchase price was about $128.5 million, subject to customary post-closing adjustments. The company said it funded the transaction with cash on hand.

Creighton Brothers, established in 1925, produces, grades, and packages conventional and specialty shell eggs for retail and foodservice markets. Crystal Lake focuses on ready-to-use egg products for the foodservice and food manufacturing industries. Its offerings include liquid, frozen, and hard-cooked eggs. The company also distributes pre-cooked egg patties, omelets, and scrambled eggs.

Both businesses are based in Warsaw, Indiana. Cal-Maine Foods did not previously operate shell egg facilities in that location. The acquired assets include commercial shell egg production and grading facilities with capacity for about 3.2 million laying hens, including 500,000 cage-free hens, along with 865,000 pullets. The transaction also includes a feed mill, 1,007 acres of land, and an egg products and hard-cooked egg processing facility.

Creighton Brothers and Crystal Lake will be integrated into Cal-Maine Foods’ existing operations. The transition also includes their 177 employees.

Cal-Maine Foods, Inc. focuses on the production, packaging, marketing, and distribution of fresh shell eggs. Its portfolio includes conventional, cage-free, organic, brown, free-range, pasture-raised, and nutritionally enhanced eggs, along with a range of ready-to-eat egg products.

10. Diamondback Energy, Inc. (NASDAQ:FANG)

Number of Hedge Fund Holders: 46

On March 5, Benchmark downgraded Diamondback Energy, Inc. (NASDAQ:FANG) to Hold from Buy. The firm did not assign a price target, citing valuation concerns. The analyst noted that the shares have lagged the XLE and XOP year to date. Fourth-quarter results were described as “unremarkable,” and the firm said it sees limited upside from current levels.

In a CNBC report published earlier in February, Sean Russo of Ritholtz Wealth Management pointed to Diamondback Energy’s investor presentation. According to the presentation, FANG has committed to returning at least 50% of quarterly free cash flow to shareholders. Through the third quarter, the company returned $892 million through dividends and share buybacks, which represented exactly 50% of free cash flow.

The company has grown its payout by 7.2% annually since introducing its first dividend in 2018. It currently pays a 2.42% annual dividend and has an $8 billion share buyback authorization in place. Slightly less than half of that authorization remains available to deploy. FANG has repurchased 36.1 million shares since the third quarter of 2021. That amounts to about 20% of its starting float during that period. The company also keeps operating costs low. Management says its “best-in-class cost structure” allows it to remain profitable even when oil prices decline.

Diamondback Energy, Inc. is an independent oil and natural gas company focused on the acquisition, development, exploration, and production of unconventional onshore oil and natural gas reserves. Its operations are concentrated primarily in the Permian Basin in West Texas.

9. The Estée Lauder Companies Inc. (NYSE:EL)

Number of Hedge Fund Holders: 50

On March 5, The Estée Lauder Companies Inc. (NYSE:EL) announced an agreement, subject to regulatory approvals, to acquire the remaining interests in Forest Essentials, an Indian beauty brand rooted in the science of modern Luxurious Ayurveda. The move builds on an 18-year partnership between the two companies. It also reflects The Estée Lauder Companies’ long-term commitment to supporting the brand’s growth and expanding its reach to consumers worldwide.

The company said the decision reflects confidence in Forest Essentials’ brand strength, vertically integrated operations, and sustainability approach. The transaction is expected to close in the second half of calendar year 2026. The Estée Lauder Companies first invested in Forest Essentials in 2008 and increased its stake to 49% in 2020.

Forest Essentials, which was founded in 2000 by Mira Kulkarni, has positioned itself as a leading prestige skincare name in India over time by combining traditional Ayurvedic practices with modern luxury beauty products. Today, it operates nearly 200 retail stores. The business is expected to generate low double-digit sales growth, which would further strengthen India’s role as an emerging market for The Estée Lauder Companies after the acquisition.

The brand will continue to be headquartered in New Delhi. Kulkarni will remain in leadership alongside Executive Director Samrath Bedi. The company plans to maintain its integrated approach, which includes Ayurveda-based research, local sourcing of ingredients, and in-house manufacturing.

Through its partnership with The Estée Lauder Companies, Forest Essentials intends to expand its presence globally while preserving its Ayurvedic heritage and product standards.

The Estée Lauder Companies Inc. manufactures, markets, and sells skin care, makeup, fragrance, and hair care products. Its offerings span several categories, including skin care, makeup, fragrance, hair care, and others. The company sells its products in about 150 countries and territories under multiple brand names.

8. Duke Energy Corporation (NYSE:DUK)

Number of Hedge Fund Holders: 51

On March 5, Evercore ISI downgraded Duke Energy Corporation (NYSE:DUK) to In Line from Outperform. The firm lowered its price target on the stock to $139 from $143. The firm said it still feels “constructive” about the company’s long-term growth prospects. Duke operates in premium-service state territories, has a sizable pipeline of load growth, and continues to invest heavily in electric infrastructure that qualifies for efficient-recovery mechanisms. Even so, the stock has already moved higher. Shares have gained about 15% since early December. Given that run, the firm said it is “comfortable taking a pause.”

Sean Russo of Ritholtz Wealth Management also discussed Duke Energy in a CNBC report published on February 23. He described the company as one of the largest regulated electric utilities in the US, serving more than 8 million customers across the Carolinas, Florida, and the Midwest. Russo noted that the management is guiding for annual EPS growth of 5%-7%, and the company’s expanding rate base supports a premium valuation. In his view, regulated earnings growing at mid-single-digit rates, combined with a yield of about 3.4% and a higher valuation multiple, keep the stock relevant for investors.

He added that Duke has returned to the list of Best Stocks in the Market and is trying to move back toward its previous high. Traders, he said, should wait for a clean breakout supported by strong volume. He also cautioned that the stock had previously failed sharply at similar levels. As he put it, the situation serves as an example of how certain price levels become meaningful to buyers and sellers.

Duke Energy Corporation is an energy holding company. The business operates through two main segments: Electric Utilities and Infrastructure (EU&I) and Gas Utilities and Infrastructure (GU&I).

7. Target Corporation (NYSE:TGT)

Number of Hedge Fund Holders: 58

On March 5, Mizuho raised its price recommendation on Target Corporation (NYSE:TGT) to $120 from $100. It reiterated a Neutral rating on the shares. After the company’s investor day, the firm said the meeting “proved a decidedly positive catalyst for shares.” According to the analyst, Target laid out a credible path toward returning to profitable growth.

Also on March 5, the company shared plans to open more than 30 new stores in 2026. Among them will be its 2,000th location, set to open in Fuquay-Varina, North Carolina. The expansion marks another step in Target’s broader strategy to support long-term, sustainable growth through continued investment in its store base. The retailer plans to add more than 300 new stores by 2035. Seven locations are already scheduled to welcome guests this March as part of the ongoing rollout.

These new stores and planned remodels are backed by Target’s $5 billion capital investment plan for 2026. The spending is aimed at improving the in-store experience while also using technology to make online order fulfillment faster and easier for customers. The company also plans to invest hundreds of millions of dollars in additional store payroll and employee training in 2026. The goal is to strengthen guest service across its locations.

Target said these steps support the growth priorities outlined by CEO Michael Fiddelke, which are expected to guide the company’s decisions in 2026 and the years ahead.

Target Corporation operates as a general merchandise retailer. The company sells products through its physical stores and digital platforms, offering everyday essentials and differentiated merchandise at discounted prices to customers it refers to as guests.

6. Starbucks Corporation (NASDAQ:SBUX)

Number of Hedge Fund Holders: 59

On March 6, DA Davidson initiated coverage of Starbucks Corporation (NASDAQ:SBUX) with a Neutral rating. It set a $97 price target on the stock. The firm said the company’s turnaround efforts appear to have repositioned the business for more sustainable growth. Even so, the analyst pointed to some uncertainty. In a research note, the firm said the pace of same-store sales improvement needed to reach the higher end of fiscal 2028 margin, and EPS guidance remains unclear. Visibility on when the company can regain its historical flow-through margins is still limited. Until there is clearer margin visibility, DA Davidson said it prefers to stay neutral on the stock.

In a separate development, Starbucks is expanding its corporate footprint. According to a report published on March 4, the company plans to open a new office in the South later this year. The Seattle-based coffee chain will establish an office in Nashville, Tennessee. The move is part of a broader effort to grow its presence across North America, particularly in the central US, the South, and parts of the Northeast. The information came from an internal message reviewed by FOX Business.

The Nashville office will house teams responsible for managing parts of Starbucks’ supply chain across North America. “To support these ambitions, we have made the decision to establish a strategic presence in the Southeast region of the U.S., and will be opening an office in Nashville, Tennessee, later this calendar year,” the company said.

Starbucks plans to offer relocation opportunities to dozens of employees currently based in Seattle. The company also expects to add new roles in the Nashville area over time. According to the Wall Street Journal, employees who choose not to relocate may receive severance and can apply for other open positions within the company.

Starbucks Corporation roasts, markets, and sells specialty coffee around the world. Its North America segment includes the United States and Canada. The International segment covers China, Japan, Asia Pacific, Europe, the Middle East and Africa, Latin America, and the Caribbean.

5. ConocoPhillips (NYSE:COP)

Number of Hedge Fund Holders: 65

On March 5, UBS raised its price recommendation on ConocoPhillips to $144 from $130. It reiterated a Buy rating on the shares. The firm said it continues to view the energy sector as offering an attractive risk/reward profile. The higher target reflects a change in the firm’s oil price outlook. UBS increased its 2026 oil price assumptions by $10 per barrel, now expecting $68 WTI and $72 Brent. The analyst also pointed to a modest expansion in valuation multiples tied to geopolitical risk.

In a research note, the firm said markets may be underestimating the potential for a prolonged conflict in the Middle East and possible disruptions to Qatar’s gas supply. Those risks could push oil and natural gas prices higher. If that scenario plays out, UBS believes companies that produce both oil and gas could see the strongest upside in free cash flow.

ConocoPhillips operates as an exploration and production company. Its Alaska segment focuses on exploring for, producing, transporting, and marketing crude oil, natural gas, and natural gas liquids. The company’s Lower 48 segment includes operations across the 48 contiguous United States as well as the Gulf of Mexico.

4. The Cigna Group (NYSE:CI)

Number of Hedge Fund Holders: 83

On March 3, Piper Sandler lowered its price recommendation on The Cigna Group (NYSE:CI) to $370 from $374. It maintained an Overweight rating on the shares. The firm pointed to the company’s rebate-free pharmacy benefit services model as a key part of its strategy going forward. According to the analyst, the model positions Cigna to comply with the 2026 Consolidated Appropriations Act and meet the terms of its settlement with the Federal Trade Commission. The firm also believes the approach could help reshape public perception of pharmacy benefit managers. In Piper Sandler’s view, these changes reduce risk around the long-term growth outlook for the PBS business and support the case for a higher valuation multiple.

In a Reuters report published on March 3, Cigna also announced that long-time CEO David Cordani plans to retire, a move that caught some analysts off guard as the company transitions to a new business model. Cordani will step into the role of executive chair on July 1. He will be succeeded by Brian Evanko, 49, a longtime executive who currently serves as president and chief operating officer. Evanko has spent three decades at Cigna and oversees the company’s insurance segment, Cigna Healthcare, along with its health services unit, Evernorth.

Cigna is also shifting part of its business model. The company is moving some customers to a structure that removes after-market discounts, commonly known as rebates. Management said the change is expected to pressure margins over the next two years. Cordani, now 60, joined Cigna in 1991 and has led the company as CEO since 2009. During his tenure, the company acquired pharmacy benefits manager Express Scripts in a $54 billion deal in 2018. Last year, it also sold its Medicare Advantage business to Health Care Service Corporation.

The Cigna Group operates as a global health company with two main growth platforms: Evernorth Health Services and Cigna Healthcare. Evernorth includes the Pharmacy Benefit Services and Specialty and Care Services segments, which provide coordinated health solutions aimed at improving how the healthcare system operates and helping people live healthier lives.

3. Johnson & Johnson (NYSE:JNJ)

Number of Hedge Fund Holders: 104

On March 3, BofA analyst Jason Gerberry raised the firm’s price recommendation on Johnson & Johnson to $253 from $227. It reiterated a Neutral rating on the shares. The firm said it updated its long-term revenue estimates to reflect new expectations for several pipeline assets nearing the market. Gerberry pointed in particular to Tecvayli and Inlexzo. He also noted that strong data from Tecvayli could have a knock-on effect on Darzalex by extending the duration of treatment.

A few days later, on March 5, Reuters reported that Johnson & Johnson had launched a website that allows some patients in the US to purchase certain drugs directly. The platform is designed for people who do not have insurance or who pay for medications out of pocket. The website, called J&J Direct, currently lists three drugs. These include diabetes treatments Invokana and Invokamet, along with the blood thinner Xarelto.

The initiative is tied to a broader commitment the company made earlier this year. In January, Johnson & Johnson agreed to improve direct access to its medications as part of a deal with U.S. President Donald Trump’s administration. The agreement included plans to lower prices in exchange for exemptions from tariffs. The company has also pledged to invest $55 billion in the United States over a four-year period.

Johnson & Johnson operates across several areas of healthcare. Through its subsidiaries, the company focuses on the research and development, manufacturing, and sale of healthcare products. Its operations are organized into two segments: Innovative Medicine and MedTech.

2. Costco Wholesale Corporation (NASDAQ:COST)

Number of Hedge Fund Holders: 106

On March 6, Reuters reported that Costco Wholesale Corporation (NASDAQ:COST) said it would lower prices if it received any refunds tied to the US Supreme Court’s decision to strike down President Donald Trump’s emergency tariffs. Costco was one of more than 1,000 businesses that challenged the tariffs in court. The companies argued that Trump did not have the legal authority to impose them under the 1977 International Emergency Economic Powers Act.

Speaking during a post-earnings call, CEO Ron Vachris said it is still unclear if or when companies will receive refunds for tariffs paid last year under the IEEPA. He noted that if Costco does receive any refunds, the company would aim to pass those benefits along to customers through lower prices and improved value. The company has already reduced prices on some products after tariffs were lowered on several countries, including China, following the Supreme Court’s decision. Items affected included textiles, bedding, and cookware.

Costco has also been investing more in its private-label brand, Kirkland Signature. The move is intended to attract shoppers who are looking for lower-priced alternatives to national brands. The company raised its membership fee in 2024 as well. For fiscal Q2 2026, Costco reported quarterly same-store sales growth of 6.7%, excluding gas. That figure came in above analysts’ expectations for a 5.88% increase, according to data compiled by LSEG. Net income for the second quarter increased nearly 14%, reaching $2.04 billion.

Costco Wholesale Corporation operates membership warehouses and e-commerce platforms that sell a range of nationally branded and private-label products across multiple categories.

1. Walmart Inc. (NASDAQ:WMT)

Number of Hedge Fund Holders: 114

On March 5, Erste Group downgraded Walmart Inc. (NASDAQ:WMT) to Hold from Buy.

Earlier, on February 26, Reuters reported that Walmart agreed to pay $100 million to settle charges related to earnings for delivery drivers. The US Federal Trade Commission said the company’s actions caused drivers to lose tens of millions of dollars. The FTC, along with 11 states, filed a complaint alleging that Walmart misled both customers and drivers. According to the agency, the company claimed that all customer tips would go directly to drivers. It also displayed inflated base pay and tip amounts to drivers participating in its Spark Driver delivery program.

The FTC said the settlement not only includes the $100M payment but also places restrictions on the company going forward. Under the agreement, Walmart cannot misrepresent potential earnings in delivery offers made to Spark drivers. A Walmart spokesperson said the company has already issued payments to affected drivers and continues to make additional payments when appropriate.

The FTC also emphasized that protecting workers remains a top priority. The agency urged companies involved in gig work to provide clear and accurate information and to maintain strong compliance systems.

Walmart Inc. operates as a technology-powered omnichannel retailer. The company runs retail and wholesale stores, warehouse clubs, e-commerce websites, and mobile apps across several regions, including the United States, Africa, Canada, Central America, Chile, China, India, and Mexico.

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