Best 3 defensive stocks to buy as the S&P nears a bear market

By:
on May 24, 2022

American stocks are not doing well. On Friday, the S&P 500 moved close to a bear market and analysts believe that this will happen in the near term. The Nasdaq 100 index is doing much worse, having dropped by 30% from its 2021 high. 

This decline could continue for a while as investors embrace the new normal of high-interest rates and stagflation conditions. Since many growth stocks will likely struggle, here are some of the best defensive stocks to buy.

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CVS Health

CVS Health (NYSE: CVS) is one of the best defensive stocks to buy in a bear market. It is an integrated company that has a market cap of over $124 billion. The company offers health plans, pharmacy services, prescription drugs, and virtual care services. The firm generates over $290 billion in revenue every year. It is also a highly profitable company that brings in over $7.9 billion. 

Most importantly, CVS is one of the best dividend payers in the industry. According to SeekingAlpha, its dividend safety rating is B+ while growth and yield are at A-. It has a dividend yield of 2.30% and a payout ratio of just 23.6%. Further, the company will always have demand in the US, making it a strong buy.

General Dynamics 

General Dynamic (NYSE: GD) is another good defensive stock to buy in a bear market. For starters, GD is a leading company in the civil aviation and defence industry. In civil aviation, the company is best known for its Gulfstream jet business. In the defence industry, the firm makes missiles, combat ships, tanks, and submarines.

General Dynamics is facing challenges as the cost of doing business rises. However, the firm is seeing strong demand across its key sectors. General Dynamics is a good defensive stock because of its strong dividend. It has a dividend safety rating of A+ and dividend growth and yield ratings of B+. The firm has a forward yield of 2.33% and a payout ratio of 41%.

Medtronic 

Medtronic (NYSE: MDT) is a good defensive company. It is a medical equipment manufacturer that makes some of the most common products in the industry. Some of the products are used to treat diabetes, ENT, gynecological, and neurological products. The company has strong revenues of more than $30 billion. In 2021, its net income was over $3 billion. 

Medtronic also has a strong dividend. It has a forward yield of 2.42% and a payout ratio of 44%, The firm’s dividend safety is A- while growth and yield are A and B.

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