New Additions to Defensive Stock List
We’re introducing two classic defensive stocks that tend to hold up well through various economic challenges: water and cigarettes. With expectations that 2025 could bring more market volatility than usual, we established our all-weather stock list back in February, which appears to be working effectively. While the S&P 500 has rebounded from its April lows, triggered by aggressive tariffs from the previous administration, the strategy of focusing on resilient stocks remains valuable. Currently, six out of nine selections are either stable or have progressed since being added, with Netflix leading the group at 14%. However, none of the picks have performed better than 5% overall.
Interestingly, the stock market seems to be operating under the assumption that most challenging tariffs are in the past and the economy is managing just fine. Yet, there are troubling signs ahead. For instance, JPMorgan CEO Jamie Dimon recently indicated that important economic indicators might begin to decline at any moment. In light of this, I identified two more stocks that could navigate through these economic tempests effectively. The primary objective of our all-weather stock list is to leverage CNBC Pro resources, including top-tier analyst research and professional stock screening tools, to find stocks that can succeed across various market conditions.
New Addition: American Water Works
American Water Works (AWK) caught my attention first, emerging from a study of top S&P 500 performers during tariff corrections between February 18th and April 8th. Despite some skepticism from clients, who anticipated the stock’s continued rise, it’s clear that AWK’s appeal lies in its 100% domestic revenue base. This stability is particularly reassuring should the economy experience a downturn.
Moreover, water utility companies generally offer a dividend yield of about 2.3%, allowing investors to secure some income alongside a safeguard against any future tariff spikes in the market.
New Addition: Altria
Next up is Altria (MO), which emerged in a screening conducted by UBS equity strategists seeking “safe haven” companies characterized by high operational quality and low volatility, paired with substantial dividends. Altria currently features a dividend yield of around 7% and has a beta of just 0.5%. This scenario presents a striking contrast, as the stock is yielding 60% more than the 10-year Treasury yield.
Additionally, Altria has also made its way into one of Trivariate’s defensive baskets. According to Parker’s firm, Altria is positioned well for market downturns, yet its price momentum remains strong, with a valuation that appears appealing based on historical trends. However, it’s worth noting that Altria’s stock has had its ups and downs over the past few years. Some investors have been drawn to its foray into smoke-free tobacco options, such as nicotine pouches, which contributed to a 30% increase in stock price last year, and a 15% rise this year (not counting dividends), positioning it at a six-year peak. While there’s a hint of unease, the 7% dividend should provide a cushion for investors at night.
