The global macroeconomic environment is expected to remain volatile in 2025, driven by geopolitical tensions, tariff wars, and sluggish consumer spending. To navigate macro shocks, several financial experts advise investors to create a diversified portfolio of companies across various sectors and lower overall portfolio risk.
While tech stocks have pushed the equity markets towards fresh all-time highs, it’s time to add quality defensive stocks to your portfolio and weather ongoing market turbulence.
In this article, I have identified three stocks that stand out for their resilient business models, strong cash flows, and essential services.
The three companies are
- NextEra Energy (NYSE:NEE), which is North America’s largest utility and renewable energy giant;
- Enbridge (TSX:ENB), an energy infrastructure giant with an indispensable pipeline network; and
- Brookfield Renewable (TSX:BEP.UN), a leader in clean energy infrastructure.
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NextEra Energy stock
NextEra Energy combines the stability of a regulated utility business through its Florida Power & Light subsidiary with aggressive growth in renewable energy through NextEra Energy Resources. The dual approach provides investors with defensive characteristics and exposure to the rapidly expanding clean energy sector.
NextEra’s regulated utility serves roughly six million customers in Florida, generating predictable cash flows backed by population growth in one of America’s fastest-growing states. Meanwhile, its renewable energy arm continues to capitalize on the worldwide transition to clean power with a massive development pipeline of wind, solar, and battery storage projects.
NextEra pays shareholders an annual dividend of US$2.06 per share, translating to a forward yield of 2.6%. Moreover, these payouts have increased at an annual rate of 9.4% over the last two decades.
Analysts tracking NEE stock expect its adjusted earnings to grow from US$3.17 per share in 2023 to US$4 per share in 2026. So, priced at 18 times forward earnings, NEE stock trades at a discount of 23% to consensus price targets right now.
Brookfield Renewable stock
Valued at a market cap of $16 billion, Brookfield Renewable is among the world’s largest pure-play clean energy companies with a diverse portfolio of cash-generating assets in the Americas, Europe, and Asia.
Its long-term power-purchase agreements are linked to inflation, while its development pipeline of over 130 gigawatts suggests the company’s growth story is far from over.
Down 47% from all-time highs, Brookfield Renewable offers shareholders a tasty dividend yield of 6% and trades at a 15% discount to consensus price targets.
Enbridge stock
Armed with a vast network of pipelines and energy infrastructure assets, Enbridge is the backbone of North America’s energy distribution. Its cash flows are regulated and tied to long-term contracts, making the TSX stock largely immune to commodity price fluctuations.
Enbridge has demonstrated remarkable consistency in dividend growth, increasing its payout over 29 consecutive years.
Moreover, strategic investments in renewable energy and recent expansion into natural gas distribution provide additional growth avenues while maintaining its defensive characteristics.
Enbridge currently pays shareholders an annual dividend of $3.77 per share, indicating a forward yield of 6%.
The Foolish takeaway
Energy and utilities remain necessary services even during economic downturns, providing these companies with sustained demand across market cycles. All three companies generate most of their revenues from regulated assets or long-term contracts, providing predictable cash flows in good times and bad.
Further, each company has demonstrated a commitment to returning value to shareholders through consistent dividend payments.
