Consider these dividend stocks for a defensive strategy, according to Jefferies.

Investors might want to consider defensive stocks offering dividends if the conflict in Iran drags on, according to a note from Jefferies. Since the war began on February 28, the market has experienced ups and downs, particularly with oil prices spiking. On Monday, there was a slight market increase as hopes for a ceasefire emerged, breaking a five-week losing streak for all three indexes. However, oil prices remain above $100 per barrel, with US West Texas Intermediate futures around $112 and Brent just below $110. Jefferies predicts that the war will conclude soon and that oil prices will average about $100 per barrel for the year. Their bear scenario, conversely, anticipates a prolonged conflict resulting in average oil prices of $120. Desh Peramnetileke, the head of quantitative strategy at Jefferies, mentioned in a Wednesday note that the U.S.-Iran situation has heightened oil prices and created risks for stagflation. Although he believes this scenario is unlikely, he cautioned that a long-term oil price shock could lead to a drop in demand, increased costs, and rising inflation. If such a situation unfolds, he expects the S&P 500’s top-line growth to shrink by 4.3%, profit margins to drop by 0.8%, and growth in earnings per share to fall from 18.3% to 8.5%. In light of this uncertainty, Peramnetileke suggests defensive yield stocks could perform well, leading him to compile a list of stable, high-yield, low-growth companies. These stocks typically exhibit lower volatility, reducing investment risk. Focusing on U.S. companies with market caps over $10 billion, dividend yields above 3%, and compound annual EPS growth rates between 0% and 10% from 2026 to 2027, he found companies with solid returns and strong histories of maintaining dividends. PepsiCo, for instance, offers a 3.63% dividend yield. Following its agreement with activist investor Elliott Investment Managers last December, the company is working to streamline its product offerings and cut costs. Executives noted that lowering snack prices would enhance competitiveness. PepsiCo has also shown positive organic sales growth recently, with its stock up 9% this year and analysts rating it as Overweight, with a potential 10% upswing according to price targets. On another note, Verizon’s stock has surged nearly 21% so far in 2026, boasting an attractive dividend yield of 5.76%. In January, the wireless carrier exceeded Wall Street’s profit and free cash flow estimates for the year, and fourth-quarter sales also surpassed expectations. Since CEO Dan Schulman took over in October and announced job cuts, he emphasized the beginning of a journey towards greater efficiency. Analysts have rated Verizon as Overweight, with a potential increase of 5.5% based on average price targets. Furthermore, Public Storage, a real estate investment trust focused on self-storage facilities, also reports promising growth and has a 4.26% dividend yield, having risen about 9% this year. The average rating for Public Storage suggests an upside of nearly 11%. Target is in the midst of a turnaround, with plans to revamp its apparel and home categories. CEO Michael Fidelke indicated at a recent conference that although changes would take time, noticeable effects would emerge soon. The stock has rallied by about 25% since the start of the year, delivering a dividend yield of 3.74%, while analysts rate it as Hold, signaling a potential uplift of 2% based on average targets.