The resurgence of COVID-19 cases, rising inflation, and geopolitical tensions might precipitate a stock market correction in the near term. So, we think investors seeking to hedge their portfolios against market declines could do worse than bet on UnitedHealth (UNH), Coca-Cola (KO), AT&T (T), Costco (COST), and CVS Health (NYSE:CVS). Their consistent dividend-payout histories and stable earnings make these stocks defensive plays. So, let’s pore over these names.The rapid spread of the COVID-19 Delta variant, rising inflation, and the geopolitical tensions related to the collapse of the Afghan government are fueling significant stock market volatility. Because rising inflation and a likely slowdown in economic growth due to the resurgence of COVID-19 cases are raising concerns over the potential for a market correction in the near term, many investors are now looking to hedge their portfolios.
While there are several portfolio hedging strategies that investors could follow in preparation for a potential market decline, betting on stocks that consistently pay dividends and have a history of generating stable earnings, known as defensive stocks, could be one of the best options. Consistent demand for their products irrespective of business cycles help these companies maintain their financials and protect their stocks from market downturns.
Expanded market reach and near inelastic demand for their products we think make UnitedHealth Group Incorporated (NYSE:UNH), The Coca-Cola Company (NYSE:KO), AT&T Inc. (T), Costco Wholesale Corporation (NASDAQ:COST), and CVS Health Corporation (CVS) solid defensive plays.