There’s certainly reason to believe that a pivot into safe stocks to buy makes sense right now. Major indices have undergone a correction during the last 20 days of April. Investors rightly wonder whether the current correction will be like that which shocked the markets throughout 2022 or a mere hiccup like those that have happened since.
Regardless, the shake up sets the stage for a pivot into a more defensive posture for investors everywhere. If the tech sector continues to fall on waning AI sentiment investors will be thankful to have become more bearish.
If not, the defensive plays discussed below will continue to be strong investments anyway. Those safe stocks to buy tend to do well across market cyclicality. What they lack in raw upside potential they make up for in safety. Let’s take a look at them.
Pfizer (PFE)
Sooner or later, Pfizer (NYSE:PFE) stock is going to make investors very happy. I’d argue that it’s already making investors happy if they’ve established a position this year. While share prices have fallen by 9% in 2024, Pfizer continues to pay a strong dividend yielding more than 6%.
In other words, investors who’ve established a position in 2024 continue to reap the rewards of that dividend while waiting for a price rebound. The stock has shown signs of breaking free of its downward trajectory already. Share prices jumped from $25 to $28 in early March before following again. It’s clear that the market wants to find a reason to support Pfizer.
I thought that it would find justification in the idea that the company is cash rich and has plenty of opportunities over the next 12 to 18 months. However, the market has not jumped on that idea in early 2024. Perhaps then the notion that certain safe stocks to buy are en vogue at the moment will be justification enough this time around.
British American Tobacco (BTI)
British American Tobacco (NYSE:BTI) is one of several tobacco stocks that investors should consider as defensive posturing rises. It is one of the better income stocks available to any investor with a yield of 10%.
Tobacco manufacturers are going through a period of evolution as cigarette smoking continues to decline. Firms including British American Tobacco are tasked with finding new ways to deliver nicotine to consumers. Meanwhile, they also have to continue paying consistent dividends to shareholders.
While that sets up a situation in which dividend cuts are possible, in the case of British American Tobacco it is unlikely. The firm’s current dividend payout ratio sits at 0.62 which is a range that is healthy overall.
The company continues to prove that it can find new revenues. Non-combustible revenues increased by 170 basis points and continue to grow as a percentage of overall revenues. That nicotine is an addictive drug is what remains important here. Not that cigarette smoking rates are on the decline. Firms like British American Tobacco will find products that deliver nicotine and profit therefrom.
Coca-Cola (KO)
Coca-Cola (NYSE:KO) has been and will remain one of the first choices when it comes to defensive stocks. Anytime the stock market hiccups, KO shares stand to benefit.
Travel anywhere on Earth and it’s likely that Coca-Cola dominates shelf space. Its flagship products dominate but the company also adapts to local preferences incredibly well. The company is capable of doing that precisely because it has an incredible depth of experience globally. That depth of experience lends the company incredible stability which is reflected in its dividend payment history.
There are few more dependable income stocks available to shareholders. Coca-Cola last reduced its dividend in 1963. The company is not going to reduce that dividend again for the foreseeable future. Investors know what to expect from Coca-Cola and as time goes on that notion gets reinforced. What that means is that they form a sort of mental habit by which Coca-Cola pops into mind when the stock market faces volatility. In other words, it’s going to continue to be one of the first defensive stocks to spike in demand when volatility rises.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
