Defensive industries are typically looked at by investors in times of uncertainty.
Indeed, we have interest rates near 40 year highs, inflation is still high, and the inverted yield curve and other factors point to a likely recession on the horizon. Yes, we haven’t seen this expected recession materialize yet. However, there are plenty of investors looking to diversify into defensive stocks and away from aggressive growth right now.
That strategy makes sense to me. Certainly, specific large-cap tech names continue to roar higher. (What an earnings beat by Nvidia (NASDAQ:NVDA) this week, right?)
Yet, what goes up can often crash down in a much more dramatic fashion. So, for those looking for more stable and consistent returns over the next year or two, here are three great long-term defensive stocks to consider.
Coca-Cola (KO)
First up, in the competitive beverage sector, Coca-Cola (NYSE:KO) demonstrates its strength. Its recent Q2 results surpassed predictions, with earnings-per-share at 78 cents compared to the estimated 72 cents, and sales reaching $11.97 billion, exceeding the expected $11.75 billion.
Unsurprisingly, Coca-Cola’s solid performance stands out amidst inflation worries that impacted similar consumer sectors. Demand for affordable treats, including snacks and soft drinks, remains strong. As long as this trend persists, Coca-Cola remains an attractive long-term dividend stock.
In addition, Coca-Cola is expanding and generating substantial cash, allowing for investor rewards. With a robust balance sheet, rising earnings per share, and an undervalued KO stock at $60, it offers a 3% dividend yield and $1.84 per share dividend.
A stable brand, global reach, and resilient business make Coca-Cola a strong dividend stock with potential for growth. The company’s dividend payout ratio of 74% indicates room for future increases.
Restaurant Brands (QSR)
The next stock is Restaurant Brands (NYSE:QSR), which continues to impress investors with strong comp growth.
In Q1 2023, the company’s consolidated comps were 10.3%, up from 7.4% in the previous year. Household favorites such as Tim Hortons, Burger King, and Popeyes saw comps of 13.8%, 10.8%, and 5.6%, compared to 8.4%, 9.9%, and -3% in the previous year. The increase was driven by improved traffic, core offerings, restaurant operations, and pricing strategies.
Also, Restaurant Brands has focused on menu innovation, digital advancements, and operational enhancements for growth. Its Reclaim the Flame plan aims to improve the guest experience and increase sales in the U.S., potentially boosting franchisee advertising fund contributions until 2028.
And so, Restaurant Brands remains my prime choice and largest portfolio position. The company’s growth potential and notable investor attention are commendable. With a dividend yield of 2.9%, it’s a stock to ponder. Few offer such defensive growth, income, and value as Restaurant Brands. Its proximity to an all-time high suggests even higher potential ahead.
Apple (AAPL)
And finally, my third pick. Apple (NASDAQ:AAPL) has consistently attracted billionaire investors with its innovation, strong business model, and surging stock.
Renowned figures like Warren Buffett and tech-focused venture capitalists recognize its value. Beyond the iconic iPhone, Apple’s diversified products and services drive increasing cash flows. Apple sets itself apart with its exceptional customer loyalty, allowing premium pricing and continued growth.
AAPL stock surged 45.51% year to date with steady growth since 2013. Despite a mature consumer electronics market projected at 2.32% CAGR from 2023 to 2028, Apple’s Q3 showed resilience. Quarterly revenue was $81.8 billion, a 1% year-over-year decline, but EPS grew 5% year over year to $1.26. With $26 billion in operating cash flow, Apple returned over $24 billion to shareholders.
AAPL stock currently trades around $178 per share, down around 10% from its all-time high. Despite inflation hurdles, Apple advances with new products, AI, and digital services. With a quarterly dividend of $0.24 and yield of 0.54%, it’s a solid long-term choice. Consider accumulating during dips.
On the date of publication, Chris MacDonald has a LONG position in KO, QSR, AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
