5 Undervalued Defensive Stocks with High Dividend Yields to Secure Your Portfolio in 2024

Let’s face it: the stock market can feel like a rollercoaster designed by a madman. One day you’re up, the next you’re down, and sometimes, it feels like your investments are dangling off the edge of a cliff. But here’s a surprising fact: while the market throws tantrums, some stocks stand tall like unshakeable pillars. These are the defensive stocks with high dividend yields. Did you know that certain defensive stocks have dividend yields over 4% and are still trading at attractive valuations? Yes, they exist, and they’re not just myths from the land of Wall Street.

In this post, I’m going to discuss about the rockstars of the stock market – the ones that not only provide stability during turbulent times but also reward you handsomely with juicy dividends. I’ll cover five defensive stocks that are undervalued and boast high dividend yields. We’re talking about stocks that offer a fortress for your portfolio, shielding it from market volatility while ensuring a steady flow of income. Buckle up, because we're about to dive into some serious stock-picking drama.

What are Defensive Stocks?

Defensive stocks belong to companies that provide essential goods and services, such as utilities, healthcare, and consumer staples. These companies tend to have stable earnings and dividends, regardless of economic conditions. Investing in defensive stocks can help mitigate risk and preserve capital during volatile market periods.

1. Leggett & Platt (LEG)

Leggett & Platt is a diversified manufacturer known for its engineered components and products for homes, offices, and automobiles. Despite its robust market presence, the company is currently undervalued, offering a high dividend yield.

Financial Performance: Leggett & Platt (Market Cap: $1.6 Billion) reported robust financial performance despite market headwinds. In Q1 2024, the company generated sales of $1.1 billion, a 4% decrease from the previous year due to deflation and currency impacts. However, Leggett & Platt maintained a solid operating cash flow and ended the quarter with a strong balance sheet​​.

Future Prospects: Looking ahead, Leggett & Platt's diversified revenue streams and strategic focus on innovation position it well for future growth. The company’s commitment to maintaining strong financial health and its ability to adapt to changing market conditions suggest a stable outlook for the coming years. With a high dividend yield of 4.2% and a P/E ratio of 16, Leggett & Platt remains an attractive option for income-focused investors​​.

Why It’s a Top Pick: Leggett & Platt has a strong track record of consistent dividend payments, making it a reliable choice for income-focused investors. The company’s diversified revenue streams and commitment to shareholder returns provide stability and growth potential.

2. Campbell Soup Company (CPB)

Campbell Soup Company is a staple in the canned foods market, known for its soups and related products. The company’s strong brand recognition and steady demand for its products contribute to its high dividend yield and undervaluation.

Financial Performance: Campbell Soup Company (Market Cap: $12.78 Billion) reported net sales of $2.52 billion for Q1 2024, a 2% decrease year-over-year. The decline was driven by a 4% decrease in the Meals & Beverages segment, partially offset by stable performance in the Snacks segment. Despite the drop in sales, Campbell Soup achieved a net income of $234 million, with earnings per share (EPS) of $0.91​​.

Future Prospects: Campbell Soup’s consistent demand and strong market position make it a reliable defensive stock. The company is focusing on expanding its product portfolio and entering new market segments to drive growth. With a dividend yield of 3.2% and a P/E ratio of 18, Campbell Soup offers both stability and potential for capital appreciation​​.

Why It’s a Top Pick: Campbell Soup’s consistent demand and strong market position make it a reliable defensive stock. The company’s focus on innovation and expansion into new product categories further enhances its growth prospects.

3. Clorox Company (CLX)

Clorox Company is a leading manufacturer of cleaning and disinfecting products. With a robust product portfolio and strong market presence, Clorox offers a high dividend yield and is currently undervalued.

Financial Performance: Clorox (Market Cap: $16.51 Billion) reported net sales of $1.4 billion for Q1 2024, a 20% decrease from the previous year, largely due to a cyberattack. Despite this setback, Clorox’s gross margin increased by 240 basis points to 38.4%. The company achieved a net income of $187 million, with an EPS of $1.49, showcasing resilience amidst challenges.

Future Prospects: Clorox’s essential products ensure ongoing demand, making it a reliable defensive stock. The company’s commitment to innovation and expansion into new product categories is expected to support future growth. With a dividend yield of 3.5% and a P/E ratio of 22, Clorox remains a top pick for defensive investors seeking steady income.

Why It’s a Top Pick: Clorox’s essential products ensure consistent demand, making it a reliable defensive stock. The company’s strong financial health and commitment to dividend payments make it an attractive choice for income-focused investors.

4. Kellanova (K)

Kellanova (formerly known as Kellogg Company) is a global leader in breakfast cereals and convenience foods. Its strong brand portfolio and diversified product lineup ensure steady revenue streams, making it a solid defensive stock with a high dividend yield.

Financial Performance: Kellanova (Market Cap: $25 Billion) reported Q1 2024 net sales of $3.5 billion, reflecting a strong demand for its products. The company achieved a net income of $340 million and an EPS of $0.98, highlighting its ability to navigate economic challenges while maintaining profitability.

Future Prospects: Kellanova’s global reach and strong market presence provide stability and growth potential. The company is focusing on innovation and market expansion to enhance its long-term prospects. With a dividend yield of 3.6% and a P/E ratio of 16, Kellogg offers a compelling mix of income and growth opportunities for investors.

Why It’s a Top Pick: Kellanova’s global reach and strong market presence provide stability and growth potential. The company’s focus on innovation and expansion into new markets enhances its long-term prospects.

5. WEC Energy Group (WEC)

WEC Energy Group is a major utility holding company providing electricity and natural gas. Its regulated business model ensures stable revenue and dividends, making it a solid defensive investment with a high dividend yield.

Financial Performance: WEC Energy Group (Market Cap: $25.22 Billion) reported Q1 2024 net income of $320 million, with an EPS of $1.02. The company maintained stable cash flow and strong earnings, supported by its regulated utility operations and strategic investments in renewable energy.

Future Prospects: WEC Energy Group’s consistent cash flow and regulated revenue model provide stability. The company is committed to dividend growth and strategic investments in clean energy, positioning it well for the future. With a dividend yield of 2.9% and a P/E ratio of 17, WEC Energy Group is an attractive choice for defensive investors.

Why It’s a Top Pick: WEC Energy Group’s consistent cash flow and regulated revenue model provide stability. The company’s commitment to dividend growth and strong financial health make it an attractive choice for defensive investors.

Summary Table of Companies

Conclusion

In uncertain times, defensive stocks like Leggett & Platt, Campbell Soup Company, Clorox Company, Kellanova, and WEC Energy Group offer stability and reliable returns. These companies provide essential goods and services, ensuring steady revenue and dividend growth even during economic downturns. By incorporating these high-yield, undervalued stocks into your portfolio, you can secure your investments and achieve long-term financial goals.

Final Thought

Investing in defensive stocks with high dividend yields and undervaluation is a smart strategy for weathering market volatility. As you build your portfolio for 2024, consider these top picks to ensure stability and growth. Stay informed and proactive in your investment decisions by subscribing to our blog for more expert insights and analysis.

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Disclaimer: The content on this blog is for educational and informational purposes only and is not intended as financial, investment, tax, or legal advice. Investing in the stock market involves risks, including the loss of principal. The views expressed here are solely those of the author and do not represent any company or organization. Readers should conduct their own research and due diligence before making any financial decisions. The author and publisher are not responsible for any losses or damages resulting from the use of this information.