By Stephen L. Thomas | January 9, 2024 | In
The stock market can be volatile, which means investors may see their earnings go up and down. For this reason, some investors put their money in securities that offer more stable returns irrespective of how the market is performing. Defensive stocks are an example of an investment that can offer consistent returns. This type of stock usually gives investors consistent dividends irrespective of how the market is doing and can be especially attractive in bear markets. What Are Defensive Stocks The primary characteristic of a defensive stock is that it’s not impacted by market swings. Unlike cyclical stocks, they can usually withstand any market condition. This can be beneficial when the market isn’t performing well, but also means investors can’t take advantage of high returns during periods of high economic growth. Defensive stocks are notorious for having low beta, which is about how a stock’s price changes relative to market movement. In terms of score, defensive stocks have a beta of below 1, meaning they aren’t as volatile in comparison to the broader market like the S&P 500, for instance. Defensive stocks are prominent in