Stocks with a Strong Defense: Prepared for Economic Downturns
In the ever-changing financial landscape, investors often seek defensive stocks that offer stability and consistent returns. Three such stocks — Pfizer, NextEra Energy, and Realty Income — have garnered attention for their defensive characteristics. Here's a closer look at their dividend yields and growth prospects as of mid-2025.
Pfizer (Healthcare Sector)
Pfizer, one of the world's largest pharmaceutical companies, boasts a dividend yield of around 6.8% to 6.86% (forward yield) as of August 2025, making it one of the highest in the healthcare sector [1][2].
The company's dividend sustainability is robust, having paid 347 consecutive quarterly dividends with 16 years of increases. Free cash flow (~$12.4B trailing 12 months) comfortably covers dividends (~$9.6B paid), though the payout ratio is high (~89%-90%) due to non-cash charges [2]. Based on 2025 earnings estimates, payout ratio is believed to be around 61%, indicating better sustainability despite the high nominal payout ratio [3].
Pfizer's growth prospects are promising, with Q2 2025 strong cash flow ($11.2B) and cost-cutting measures supporting dividend sustainability [1]. However, risks include patent cliffs post-2028 (notably for Eliquis accounting for 14% of revenue) and regulatory challenges [1][3]. These risks are mitigated by a robust pipeline with over a dozen FDA approvals in 2024, including novel therapies and acquisitions (e.g., Seagen deal) [3][4]. Pfizer raised 2025 EPS guidance and collaborates strategically with other pharma majors, underscoring growth potential and innovation capabilities [4][5]. Analysts present a cautious but slightly optimistic target with about 11% upside potential from current prices [4].
NextEra Energy (Utility Sector)
NextEra Energy, the largest electric utility holding company in the United States, typically offers a moderate dividend yield (historically around 2-3%) combined with stable earnings from regulated utility operations and growth from its renewable energy business. As of the provided data, specific and current 2025 dividend yield and growth data for NextEra Energy are not available. However, the company is known for dividend growth supported by its leading position in clean energy investments and consistent cash flow generation.
Realty Income (Real Estate Investment Trust - REIT)
Realty Income, often referred to as "The Monthly Dividend Company," offers steady dividends typically around 4-5%. Its growth prospects rely on long-term lease contracts, a diversified tenant base, and property acquisitions, supporting relatively stable dividend growth over time. Exact latest figures for 2025 should be verified from Realty Income’s investor relations or current market data sources for accuracy.
In summary, Pfizer offers a high dividend yield (~6.8%) with a significant but manageable payout ratio backed by strong cash flow and a promising pipeline. NextEra Energy and Realty Income remain classic defensive stocks with stable but lower dividend yields (typically 2-3% and 4-5%, respectively) and consistent growth profiles. For precise 2025 metrics, it is essential to consult up-to-date financial news or company releases.
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