Investing

8 Defensive Stocks to Avoid a Market Sell-Off for the Summer of 2017

Johnson & Johnson

Johnson & Johnson (NYSE: JNJ) is one the top market cap stocks in the health care sector and it has raised dividends for more than 50 consecutive years. Selling everything from medical devices to over the counter health items and prescription drugs may be boring on the surface, but that is just what chicken-bulls want.

Johnson & Johnson was last seen at $123.60, in a 52-week range of $109.32 to $129.00. Its dividend used to yield over 3%, but appreciation now has it closer to 2.6%. The consensus target price is up at $128.35.

Kraft Heinz

Kraft Heinz Co. (NASDAQ: KHC) is almost as defensive as you can get by selling endless amounts of food. It is one of the largest food companies in the world, and Warren Buffett and 3G are big investors. Even with a war on bad oils, salt, sugar and simple carbs, wherever food trends go you can count on Kraft Heinz to be there. Kraft’s dividend yield previously was over 3%, but gains have that now at about 2.6%.

While Kraft Heinz shares were recently at $91.10, and above the $90.29 consensus analyst target price, the reality is that its performance in 2017 has kept it above that target price. Back in February, Deutsche Bank started coverage with a Buy rating and issued a $103 price target, and the stock was around $91 at the time.

Procter & Gamble

Procter & Gamble Co. (NYSE: PG) is often considered to be the crowned king of defensive stocks in consumer products, with close to a $225 billion market cap. The company has divested some brands to focus on a core growth strategy. While currency aspects have capped some earnings results, the reality is that the company keeps managing to find ways to deliver for investors, with a yield that is better than 3%.

Its shares were recently trading at $87.75, down from a 52-week high of $92.00 and compared with a consensus price target of $92.50.

Wal-Mart

Wal-Mart Stores Inc. (NYSE: WMT) may seem hardly defensive now that everything tied to retail is succumbing to being Amazon’d to death. One company that can buck this, with a strong balance sheet and almost 100% annual penetration of every U.S. shopper at least once a year, is Wal-Mart. The “Always Low Prices” mantra lives on, but Wal-Mart is investing in more online efforts each quarter to fend off Amazon pressure and to keep other retailers at bay. Its same-store sales growth hasn’t been impressive, but it has an ability to do better than many other retailers due to its buying power.

Wal-Mart shares were trading at $75.40, and that is marginally higher than the consensus price target of $74.56. The reason the stock is higher is because of a 10% or so gain in that share price so far in 2017, and because it is barely lower than its 52-week high of $75.77. Merrill Lynch’s research team set an $88 price objective for Wal-Mart back in February, so there are still some very bullish analysts out there. Wal-Mart now yields almost 2.8%, and it has hiked dividends for 44 straight years.

At the end of April, the Dow Jones Industrial Average was up more than 6% and the S&P 500 was up just over 7% so far in 2017. As of April 27, here are how each of the 2017 defensive stock candidates have performed (price performance and dividends) so far year-to-date (YTD) and over the past month.

  • Altria, up over 6% YTD but down about 2% in past month
  • American Water Works, up over 11% YTD and up about 4% in past month
  • AT&T, down more than 2% YTD and down over 1% in past month
  • Coca-Cola, up over 5% YTD and up over 2% in past month
  • Johnson & Johnson, up almost 8% YTD but down almost 2% in past month
  • Kraft Heinz, up almost 5% YTD and down less than 1% in past month
  • Procter & Gamble, up about 6% YTD but down over 2% in past month
  • Wal-Mart, up over 9% YTD and up about 8% in past month