Defensive stocks are a type of investment that can provide stability and protection during times of market volatility. These stocks typically belong to companies that are less impacted by economic downturns and tend to perform well even when the overall market is struggling.
Pros of investing in defensive stocks include their ability to provide consistent returns, even during times of economic uncertainty. These stocks are often seen as a safe haven for investors looking to protect their portfolios from market fluctuations. Additionally, defensive stocks typically pay dividends, providing investors with a steady stream of income.
However, there are also some cons to investing in defensive stocks. One potential downside is that these stocks may not offer as much growth potential as other, more volatile investments. Additionally, defensive stocks can sometimes be overvalued, leading to lower returns for investors.
Examples of defensive stocks include companies in industries such as healthcare, consumer staples, and utilities. These companies provide products and services that are considered essential, regardless of the state of the economy. Some well-known examples of defensive stocks include Johnson & Johnson, Procter & Gamble, and Coca-Cola.
Overall, defensive stocks can be a valuable addition to an investment portfolio, providing stability and protection during uncertain times. However, it’s important for investors to carefully consider the pros and cons before making any investment decisions.