Need to Rebalance Your Portfolio? Add These 3 Defensive Stocks NOW

Stock Market

For investors banking on some volatility in 2024, now may be a good time to consider rebalancing one’s portfolio. After all, the beginning of the year is often the time many investors consider the balance of their portfolios. Wisely, they want to position themselves for a given 12-month period.

Over the next year, interest rates are expected to come down, which could boost growth stocks. However, various highly stable and profitable companies in more defensive sectors may be the better bet. Consider rotating these three stocks into your portfolio soon.

McDonald’s (MCD)

Man holds out a McDonald's bag with the golden arches logo on it at a drive-thru window.

Source: Gargantiopa / Shutterstock

Some consider McDonald’s (NYSE:MCD) to be an enduring symbol of American capitalism, offering stability in a portfolio. Its global presence makes it a reassuring investment. Fluctuations in interest rates impact both investments and significant purchases, as seen during the initial years of the Covid-19 pandemic.

As a global icon, it serves over 70 million customers daily. Recent mixed financial performance led to low growth prospects. Yet, new expansion plans includng 8,802 restaurants by 2027 and enhanced digital strategies could transform its trajectory. 

The pandemic showcased its success, enhancing drive-through efficiency and offering targeted deals through its mobile app. Despite a forward price-earnings ratio of 24-times, analysts project 6% earnings growth and an 8% stock price increase in the next year. Additionally, a 10% hike in its quarterly dividend to $1.67 per share enhances its appeal as a top dividend stock for 2024.

Dominion Resources (D)

a truck bearing the Dominion Energy logo

Source: ying /

Virginia-based electric utility Dominion Energy (NYSE:D) is making strides in renewable energy with a $9.8 billion offshore wind project. The second phase is underway, aiming for $3 billion in tax credits and a potential $4 monthly increase in Virginian customers’ bills. Additionally, Dominion proposed 12 solar projects to power nearly 200,000 households in Virginia, making them eligible for tax credits under the Inflation Reduction Act.

With revenue growth at 10.47%, surpassing the sector median, and operating cash flow up 75.21%, Dominion is strategically positioned for electricity demand, offering a 6% dividend yield. But, the market may be overlooking Dominion Energy’s resilience. Despite elevated leverage, its robust $2.7 billion annual operating cash flow supports growth. 

With gas prices stabilizing, the stock, trading at 16-times forward earnings, presents a potential recovery play for investors.

JPMorgan Chase & Co. (JPM)

Chase Bank logo and storefront

Source: Daryl L /

JPMorgan (NYSE:JPM) stands out as a reliable bank stock with superior performance, a 2.50% dividend yield, and resilience during regional bank collapses in Q1 2023.

Outperforming peers, JPMorgan led the U.S. banking industry, contributing almost 20% of all bank profits last year. With approximately 70% gains over the past five years, it surpasses Bank of America, Citibank, and Wells Fargo in returns.

JPMorgan Chase achieved its best-ever annual profit, projecting a higher-than-expected interest income for 2024, despite a quarterly profit dip. The bank’s acquisition of First Republic Bank and a record net interest income of $24.2 billion contributed to its success. 

CEO Jamie Dimon emphasized economic stability but cautioned about persistent inflation and prolonged higher rates. Robust macroeconomic conditions fueled impressive growth, with Q3 2023 revenue surging 23% to $39.9 billion. Despite potential growth moderation in FY24, JPMorgan’s solid financial position and attractive valuation make it resilient.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.