Investing

5 Defensive Stocks Largely Avoiding the Sell-Off

Thursday has been one ugly day for the U.S. equity markets, with the S&P 500 and the Dow Jones Industrial Average down 1.3% with just over two hours until the close of trading. Many defensive stocks are not down as much as the broad stock market — something you would expect from their name, selling off less than the broad market in a correction.

24/7 Wall St. has tracked several defensive stocks that are not down near as much as the market, which tends to bode well for investors who are looking to invest selectively when and where they can. The good news here is that most of these have solid dividends as well.

American Water Works Company Inc. (NYSE: AWK) is the largest water utility in America, covering some 14 million Americans in 40 states. With the global threat over water in the air, it seems odd to think that water would be dependent on the economy. Still, they do serve companies too. This stock almost never pulls back very much, and 5% pullbacks from the peak have proven over and over to be gifts from the market gods. At $48.19, its shares were down a mere 0.2% so far on the day. Its 52-week and all-time high of $50.71 means that one or two more pennies lower will equate exactly a 5% pullback in the stock. American Water Works has a 2.6% dividend yield.

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McDonald’s Corp. (NYSE: MCD) may not be a great health destination in food, but people will care a bit less in a major sell-off about their labor and food quality issues if they have to eat a cheap meal. McDonald’s stock was down only 0.8% at $94.25 on the day, and this was still well under its 52-week high of $103.78. McDonald’s also pays out a 2.4% yield to its stockholders. Maybe the mantra stands — you gotta eat!

Pfizer Inc. (NYSE: PFE) is down 0.7% at $30.10 on the day. The good news here is that Pfizer may have learned its lesson from trying to invert domiciles for tax purposes. The bad news for the company’s tax plan (and its shareholders) is that the Treasury may have taken that option away from them. Also, Pfizer shares have finally gotten back above $30, and the consensus analyst price target above $34 still leaves investors with much potential implied upside. Pfizer’s 3.6% dividend yield almost feels artificially high since its share price has remained stuck under $30 for a while.

Procter & Gamble Co. (NYSE: PG) was down by 0.76% at $84.59 around 1:30 on Thursday. This consumer products giant is in the process of offloading many lower-growth brands to focus on a core company, and it has a market cap of nearly $230 billion. Maybe things are getting tough around the world, but for now we all need razors, toothpaste, toilet paper and other consumer goods. P&G also has a 3.2% dividend yield.

Reynolds American Inc. (NYSE: RAI) is being treated as the best of the tobacco majors on Thursday. If people are stressed, maybe they will smoke more — and four days of triple-digit gains or losses in a row on the Dow Jones Industrial Average may be creating that stress. Shares were down by less than 0.7% at $57.80 in mid-afternoon trading on Thursday. Amazingly, Reynolds is almost $6 lower than its 52-week high. That has put its yield around 4.8% again.

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