Investing

5 Big Defensive Dividend Stocks to Buy Trading at Deep Discounts

American Water Works was also one of our own 10 stocks to own for the next decade. Quite simply, this is the best water stock that investors can add into their portfolios.

American Water Works closed Thursday down 2% to $50.18, in a 52-week range of $45.98 to $57.48. The closing price is almost 12% below the consensus analyst price target of $56.80 and 12.7% below the 52-week high. The company also has an annual dividend of $1.36, a yield of 2.7%.

AT&T

AT&T Inc. (NYSE: T) was under pressure and deemed unexciting for a long time, but the merger with DirecTV (NASDAQ: DTV) is expected to close soon. That will offer even more dividend coverage, and AT&T is expanding in Mexico and Latin America. We have seen analyst upgrade after upgrade of late, more than can easily be counted.

AT&T closed Thursday down 1.2%, at $34.39 in a 52-week range of $32.07 to $37.48. The company also has an annual dividend of $1.88, which is a yield of 5.3%. Currently, the latest closing price is 5.9% below the consensus analyst price target of $36.54 and 8.2% below the 52-week high.

ALSO READ: 4 Defensive Oil Exploration and Production Stocks to Buy Now

Coca-Cola

Coca-Cola Co. (NYSE: KO) may have come with a bad reputation for sugar water drinks of late, but the company keeps moving away from that dependence. Big deals with Monster Beverage Corp. (NASDAQ: MNST) and Keurig Green Mountain Inc. (NASDAQ: GMCR) have highlighted a move away from the Coke brand alone.

Coca-Cola closed Thursday relatively flat at $39.92, in a 52-week range of $39.06 to $45.00. The current price is 11% below the consensus analyst price target of $44.83 and 11.3% below the 52-week high. The company also has an annual dividend of $1.32, a yield of 3.3%.

Procter & Gamble

Procter & Gamble Co. (NYSE: PG) is the global leader in consumer products. It is larger by market cap than the other top consumer products players combined. It also unloaded its Duracell outfit, and it recently sold off many brands to Coty for close to $15 billion. Its restructuring efforts may not be over, and it is getting a lot of fresh cash that could be used for higher dividends, buybacks or even new developments with higher margins.

P&G does come with currency risk of course, but that is not a deal-killer for defensive investors. Having exposure to the world does that, but investors with long-term horizons have grown to know that currency woes become currency tailwinds through time. P&G was recently a new runner-up in our own 10 stocks to own for the next decade.

P&G shares closed Thursday down 0.4% at $80.66. The consensus analyst price target is $88.00, and the 52-week range is $77.10 to $93.89. The current price is 8.3% below the consensus price target and 14.1% below the 52-week high. The company also has an annual dividend of $2.65, a yield of 3.3%.

ALSO READ: 4 Specialty Pharma Stocks That Could Be Acquired

Again, not all defensive stocks are created equal. The trick is to know which ones will be viewed favorably at different times in the business and market cycles — and why.