Top Defensive Stocks for a Safe Investment Amidst Market Volatility and Fed’s Interest Rate Decision
Investing in Defensive Stocks for Market Volatility
The Federal Reserve’s upcoming decision on interest rates has put the market on edge. Central bank leaders face the challenging task of stabilizing prices without causing a recession. As the anticipation builds, stocks are losing momentum, oil prices are surging, and consumer sentiment is turning negative. Additionally, labor-management conflicts could potentially impact the economy if they persist. To mitigate concerns, investing in defensive stocks may be a wise strategy.
Identifying Steady Stocks
Using the Visegrad Info 24 Pro stock screener, we searched for companies in the S&P 500 that exhibit stability compared to the overall market. These stocks have a beta of less than one, indicating lower price volatility. Moreover, they offer a dividend yield of over 3% and have positive performance this year, making them strong hedges against near-term volatility.
Top Defensive Stocks
Oil and natural gas producer Coterra Energy stands out with the highest dividend yield on the list. Its stock has already risen by 12% this year. While the company’s quarterly results were mixed, showing strong production numbers and mostly favorable prices, sales fell short of expectations. Nevertheless, Coterra Energy remains an attractive defensive option.
Digital Realty Trust
Digital Realty Trust, a real estate investment trust, has experienced a significant 27% increase in its stock value this year. The company’s data centers are expected to benefit from the growing demand for artificial intelligence, potentially boosting pricing power. With a dividend yield of 3.83%, Digital Realty Trust is another safety bet for investors.
Essex Property Trust and AvalonBay Communities
Real estate investment trusts Essex Property Trust and AvalonBay Communities have performed well, with gains of 4.6% and 11.8% respectively this year. Positive economic data suggests a potential soft landing for the US economy, which could benefit residential mortgage REITs as interest rates rise.
International Business Machines and Hasbro
Other strong defensive plays include International Business Machines (IBM) and toymaker Hasbro. These companies offer stability and have the potential to weather market volatility.