Are these the best defensive stocks to watch?

What are defensive stocks?

Defensive stocks are companies whose underlying business is expected to generate reliable revenue and profits regardless of the wider economic environment. This could be because they hold a dominant market position, have a reputation for value for money, or even simply provide the bare necessities.

Accordingly, they are usually blue—chip companies benefiting from inelasticity of demand, making them ‘safe havens.’ In other words, if they raise prices to match inflation, consumers will continue to buy the products regardless.

Defensive companies rarely deliver significant capital growth, and therefore tend to underperform during bull markets, even underperforming passive investment in indices such as the FTSE 100. But in bear markets, they can appear more attractive for the consistent earnings.

By contrast, cyclical stocks are businesses which tend to outperform in the good times and fall sharply during downturns. These might include consumer discretionary stocks, miners, or oilers, all of which depend on a healthy economy to thrive.

Investing in defensive stocks — and particularly the timing of an investment — is not simple. If you reposition your portfolio too early, you might miss out on additional growth before a downturn becomes too severe. And when the economy recovers, defensive stocks can become undervalued as investors sell in favour of growth.

This makes buying these types of shares in a bull market and then selling them in bear market a popular contrarian investing strategy; though as always, this is harder to do than it sounds.

The following FTSE 100 dividend stocks can be considered to be some of the more popular defensive companies to own in the UK as many have a reliable history of paying out. But remember, past performance is not an indicator of future returns.

How to trade or invest in defensive stocks

1. Learn more about defensive shares
2. Decide whether you want to trade or invest
3. Open an account
4. Search for your chosen stock on our app or web platform
5. Make your trade or investment

Investors look to grow wealth by buying and holding shares over an extended period of time. Capital can be gained through share price return and dividends (if paid).

Trading often uses leverage and takes a more short—term approach. With leverage, you can take a position larger than your initial deposit. This can amplify potential profits, but it can also amplify potential losses.

For instance, with 5:1 leverage, you could open a £5000 position by depositing a margin of £1000. A 10% market movement could result in a 50% loss or gain on your initial margin.

Although negative balance protection means you won’t lose more than your deposit, markets can be highly volatile and you could lose your whole deposit.

The best defensive stocks to watch

These stocks are the largest defensive stocks on the FTSE 100, if you consider defensive sector companies to be only those which deal in healthcare, consumer staples, utilities or tobacco.

1. AstraZeneca
2. British American Tobacco
3. Unilever
4. GSK
5. Diageo

AstraZeneca (Market cap: 212 billion)

AstraZeneca is a multinational pharmaceutical titan which focuses on the development and commercialisation of novel prescription medicines. It works in areas such as cardiovascular, oncology, and respiratory medication — though it has a presence across almost the entire development market.

Healthcare sector stocks remain highly defensive, and AstraZeneca is no exception.

​The company’s Q3 results saw revenue reach $15.19 billion, up around 12% year-over-year. This increase was largely driven by strong sales across its oncology, cardiovascular/renal/metabolism, and respiratory portfolios. 

By 2030, AstraZeneca aims to bring in $80 billion in revenue. While meeting this target will be difficult, but the company’s strong performance in existing medicines, and its investment in new potential treatments stand it in good stead.

​Analysts have given the stock a buy rating with a predicted price target of 13,905p in the next 12—month period.

​British American Tobacco (Market cap: 118 billion)

​British American Tobacco is one of the world’s largest tobacco companies, boasting a brand portfolio including Lucky Strike, Dunhill, and Pall Mall. In terms of defensiveness, tobacco is a popular investing theme given the addictive nature of nicotine — though of course there is an ESG element to consider.

​In 2024, the company saw little profit or revenue growth, and a similar outlook is expected for the remainder of 2025 as it continues to contend with changing consumer preferences and government intervention.

​To help overcome these issues, British American Tobacco have invested heavily into New Category non-combustible, reduced-risk alternative products - such as e-cigarettes, heated tobacco and nicotine pouches - which it hopes will account for 50% of its revenue by 2035.

​Although this is possible, increased scrutiny surrounding New Categories products may negatively impact profit margins as consumers opt for healthier alternatives.

​Analysts have given the stock a buy rating and predict it’ll rise to a mean price target of 4,387p in the next 12—month period.

​Unilever (Market cap: 110 billion)

​Unilever is a multinational consumer goods company which produces a wide range of products including food, drinks, cleaning agents, beauty and personal care products. Some of its well—known brands include Dove, Ben & Jerry’s, and Hellmann's. While the company has arguably underperformed in recent years, its turnaround plan seems to be paying off.

​Unilever has reported a mixed Q2 performance, bringing in a revenue of €14.99 billion, down below 2% year-on-year.

​The company’s ‘power brands’ are the 30 top brands the group owns, which have accounted for up to 75% of sales this year. This trend is expected to continue, and the company is anticipated to place most of its investment in these brands going forward.

​CEO Hein Schumacher remains optimistic about the company’s performance throughout the rest of the year, however, this is highly dependent on successful execution of its business strategy among economic and tariff uncertainties.

​Analysts have placed the stock in a buy position with an average price target of 5,035p in the next 12—month period. 

GSK (Market cap: 94 billion)

GSK — formerly GlaxoSmithKline — is a global biopharma company which aims to positively impact the health of 2.5 billion people by the end of 2030. After spinning out consumer healthcare company Haleon, GSK’s R&D focus is on four therapeutic areas: infectious diseases, HIV, respiratory/immunology and oncology.

​The company reported strong Q3 results with revenue increasing by close to 7% to £8.54 billion year-over-year. Operating profit was up 8%, reaching £2.98 billion and the company remains on track to deliver its full—year guidance, having upgraded its outlook after its strong Q3 performance, and now expects turnover growth of 6-7%, core operating profit growth of 9-11% and core EPS growth of 10-12% at constant exchange rates.

GSK have recently increased investment in HIV treatment following an improved outlook on the medicine in development. And, although smaller in sales, recent approval of cancer treatment suggests growth potential in this market.

CEO Emma Walmsley claims ‘We have strengthened capabilities in key technology platforms and completed investments to develop new mRNA vaccines, ultra—long—acting HIV medicines and a promising new medicine for severe asthma. All this supports our future growth and confidence to bring meaningful innovation to patients.’

Diageo (Market cap: 50 billion)

Diageo is a global leader in premium alcoholic drinks, controlling over 200 brands and with sales in nearly 180 countries. The company owns distilleries which produce 40% of all Scotch whisky including Johnnie Walker — and it also owns Guinness, Smirnoff, Baileys, Captain Morgan, Tanqueray and Gordon's.

​The company’s full-year results were mixed with revenue flat at $20.24 billion but free cash flow at $2.7 billion for the year ended 30 June 2025 due to better cash management. Despite this, pre-tax profit was down nearly 11% - to $4.87 billion - primarily due to exceptional impairment and restructuring costs, adverse foreign-exchange impacts, and a modest decline in organic operating margin driven by increased overhead investment.

With its plan to prioritise sales of high-end, luxurious products proving effective, the potential US tariffs could impact profits by up to $200 million. Although the company remains confident price changes could make—up for around 40% of potential losses, uncertainties surrounding this have resulted in Diageo removing its medium term guidance and investor sentiment remains cautious.

​Analysts rate the stock as a buy and predict that its mean long term price will increase to 2,188p over the next 12-months.

Top defensive shares to watch summed up

These are just a small selection of some of the best defensive shares to watch in 2025. Always do your own research. Past performance is not a guide to future performance.

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