11 Defensive Dividend Stocks for Riding Out the Storm

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Remember when 1,000-point moves in the Dow where a big deal?

Lately, they've become almost commonplace. The Dow fell by just shy of 1,000 points on March 3 after rallying by more than 1,200 points on March 2. This follows a week in which the Dow closed down by more than 1,000 twice and down 879 another day.

That's some monster volatility. Yet despite the market turmoil, a handful of defensive dividend stocks are keeping their heads above water. It's an eclectic group, but you do see some common threads. Many are in basic industries that aren't particularly sensitive to economic growth or virus fears, such as packed foods and grocery stores. Many are low-beta stocks – shares that are less volatile than the broader market. And most pay above-average dividends, which helps to smooth out the ups and downs of the share price swings.

These survivors also are a little off the beaten path and don't have much representation on the major stock indexes. That matters because when investors dump index funds, the mega-cap stocks that dominate the Dow, S&P 500 and Nasdaq often get hit hard.

"Aggressive selling in the indexes can translate into aggressive selling in historically strong stocks such as Apple (AAPL (opens in new tab)), Microsoft (MSFT (opens in new tab)) and the other trillion-dollar names," says Mario Randholm, portfolio manager at alternative investments firm Randholm & Co. "It's hard to picture a scenario in which all these dominant names will continue to outperform during a broad-market selloff."

Today, we're going to take a look at 11 low-beta, defensive dividend stocks that have been keeping their heads above water. As of the time of this writing, all were not only outperforming the market since the correction began Feb. 19, but most were clinging to at least modest gains. Those gains might prove to be tenuous if the market takes another leg down. But at the very least, these stocks seem better-positioned to sustain less damage than most of their peers.

Data is as of March 3. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price.

Charles Lewis Sizemore, CFA
Contributing Writer, Kiplinger.com

Charles Lewis Sizemore, CFA is the Chief Investment Officer of Sizemore Capital Management LLC, a registered investment advisor based in Dallas, Texas, where he specializes in dividend-focused portfolios and in building alternative allocations with minimal correlation to the stock market.