AvalonBay Communities-7 Defensive Stocks to Weather Any Downturn With Ease

Core Viewpoint - The article discusses the importance of defensive stocks in the current market environment, highlighting their potential benefits even during bull markets and the need to remain cautious amidst economic uncertainties [1]. Defensive Stocks Overview - Defensive stocks are likened to all-season tires for financial vehicles, suggesting their reliability in various market conditions [2]. Company Summaries Colgate (CL) - Colgate is recognized for its passive income with a forward dividend yield of 2.23% and a 61-year history of consecutive payouts, classifying it as a dividend king [3][4]. - The company's products maintain permanent relevance, as personal care remains a priority regardless of economic conditions [3]. - Financially, Colgate's stock is considered fairly valued with robust margins and consistent profitability, receiving a consensus strong buy rating with a price target of $90.93, indicating over 5% upside potential [4]. McDonald's (MCD) - McDonald's, the largest fast-food chain globally, presents a strong case for defensive investment due to its balanced business model that combines discretionary retail with defensive characteristics [6]. - The company has a forward yield of 2.24% and boasts 48 years of consecutive payout increases, nearing dividend king status [7]. - The normalization of society post-Covid-19 may increase foot traffic to McDonald's, enhancing its business prospects [6]. Home Depot (HD) - Home Depot is viewed as an economic benchmark, particularly relevant to the housing market, with a forward yield of 2.42%, above the consumer discretionary sector average [8][9]. - The company has a payout ratio of less than 55%, suggesting sustainability in its dividend payments, and an impressive return on invested capital (ROIC) of 29.28% [9]. IBM (IBM) - IBM has gained 15% in equity value since the beginning of the year and over 42% in the past 52 weeks, driven by its investments in AI and machine learning [11][12]. - The company offers a forward dividend yield of 3.58% and has a history of 28 consecutive payout increases, providing stability during uncertain times [12]. AvalonBay Communities (AVB) - AvalonBay, a real estate investment trust (REIT), focuses on apartments in major metropolitan areas and benefits from increased demand due to high residential real estate prices [13][14]. - The stock has a forward dividend yield of 3.88% and is rated as a moderate buy with a price target of$ 193.41, indicating over 10% upside potential [14]. Pfizer (PFE) - Pfizer, a pharmaceutical giant, has faced challenges post-Covid-19 but has recently received a "buy" rating from Guggenheim analysts, with a forecasted price of $36, suggesting significant upside [16][17]. - The company offers a forward yield of 6.05%, well above the healthcare sector average, and has a history of 14 years of consecutive payouts [17]. Universal Corp (UVV) - Universal Corp, a leading tobacco merchant, reported revenue of$ 2.57 billion for the fiscal year ended March 2023, up from $2.1 billion the previous year [18][19]. - The company has a forward yield of 6.48% and a history of 54 years of consecutive dividend increases, making it a strong candidate for defensive stocks [19].