Benefits of Investing In Defensive Companies

Here are some of the major benefits of investing in defensive stocks:

  • Defensive stocks are considered some of the safest investments in equities. These companies usually promise decent returns over the long term. Warren Buffet is especially known for preferring defensive stocks. In fact, Berkshire Hathaway in itself is considered a defensive stock by some.
  • Defensive stocks have a lower beta, which is the volatility of a stock compared to the rest of the market. As such, they tend to be more stable stocks as opposed to cyclical companies.
  • If the stock pays dividends, they tend to be constant and with a predictable growth rate.
  • Even if the market is in a bull run, defensive stocks can offer much-needed diversification, even for growth-focused investors.