Although we are always attracted to the latest tech stock outperforming the market and showing up on every news station, defensive shares are what anchor your portfolio in times of crisis.
No matter what your risk tolerance, it pays to have a few of these 'all weather' players in your holdings. Here are 3 defensive ASX shares that are worthy of consideration.
Coca-Cola Amatil Ltd (ASX: CCL)
Coca-Cola prepares, distributes and sells a huge range of alcoholic and non-alcoholic beverage products. It has a steady income and isn't hugely affected by market downturns (we still drink coffee in a crisis, right?).
Trading at around $8.50 a share at the time of writing, Coca-Cola Amatil represents both a defensive share and value for money, in my opinion. Before the COVID-19 crash in March this year, Coca-Cola shares reached a 52-week high of $13.18. In fact, the Coca-Cola share price has reached around $10 for the last 13 years in a row, which lends weight to the opinion that its current price of $8.50 could be well undervalued.
Coca-Cola shares also provide investors with a healthy dividend return of 5.51%, which, when added to the undervalued nature of the stock, makes this one to add to the portfolio, in my view.
Woolworths Group Ltd (ASX: WOW)
Woolworths operates retail grocery stores on a large scale. The nature of its business (providing items of necessity) makes it an ideal candidate to stabilise any portfolio.
The Woolworths share price is trading at $38.21 per share at the time of writing. While it hasn't fully recovered to its pre-crash highs, the Woolworths share price has displayed resilience throughout the recent market volatility. This stability is not surprising considering the nature of the COVID-19 pandemic (we've all seen the run on food at our local Woolies). During times of panic, people prioritise the necessities and Woolworths sells them all.
The Woolworths share price has risen by more than 40% over the last decade, which is great for a defensive stock. Woolworths also pays its shareholders a dividend of 2.70%, which isn't high, but the combination of steady growth, stable earnings and dividend payments certainly make a strong case to add Woolworths shares to any portfolio for the long term, in my view.
Ramsay Health Care Limited (ASX: RHC)
Ramsay Health Care provides healthcare to both public and private patients across Australia. The Ramsay share price recovered quickly following the crash in March, trading at $63.62 per share at the time of writing. This represents a 21% discount on pre-COVID highs.
Due to the nature of its business, I think Ramsay is an ideal candidate to add to your portfolio in a heath crisis. Healthcare is a constant necessity and the current crisis only elevates the value of the industry. While the share price may be 21% lower than pre-March highs, Ramsay shares have grown approximately 370% over the last decade, which is fantastic for investors.
Dividend-wise, the return is 2.42% (at the time of writing). Although Ramsay has ensured its dividend has remained both stable and growing over the last decade, in April this year it announced that the dividend would be temporarily suspended amidst COVID-19 concerns and reductions in elective surgeries. We wait for further announcements from the company on the future date of resumption.
In my opinion, Ramsay Health Care is an easy choice to add to the portfolio for any investor.
Foolish takeaway
Having a few 'all weather' stocks in the portfolio might not seem attractive from a high growth point of view, however they provide stability, comfort and long-term stable growth. All 3 defensive ASX shares above represent industries that will continue to operate, regardless of the economic environment. Having them in the portfolio can protect profits in a downturn and certainly help you sleep at night!
