Defensive Stocks

Defensive stocks come from industries that people rely on in good times and bad, such as utilities, health care, and consumer staples. Because demand for electricity, medicine, and groceries holds up in a recession, these companies tend to see steadier earnings.

That stability makes them a refuge when growth slows. They usually fall less than the broad market in downturns, though they also tend to lag when the economy is booming.

Investors often rotate into defensives late in the business cycle or when they expect trouble ahead. Their steady dividends add to the appeal for those seeking to weather volatility.