The recent market turbulence has many traders wondering if the end of the six-year bull market is imminent. A growing number of investors are bracing for the worst in coming months by looking to go on the defensive.
But going defensive doesn’t necessarily mean selling everything you own and switching to an all-cash portfolio. Here’s a peak at things to look for when selecting the best defensive stocks to own during a market downturn.
1. Blue Chips
First, look for large companies with long-term track records of success and strong positions within their market segment. Though they may last for years, market downturns are only temporary. However, many smaller, marginal companies might go out of business if things get bad, and investing in blue chip companies reduces exposure to that risk.
2. Dividends
In uncertain times, certainty can be a godsend. Who knows what type of returns you can get on stocks when the market is in a freefall, but dividends from solid companies are nearly guaranteed. Make sure the company has a long-term track record of maintaining or boosting dividends and has a reasonable payout ratio.
3. Low Beta
Beta, a measure of how much a stock moves relative to the overall market, is…
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