3 defensive stocks offering stability and regular returns

Seeking stability and consistent returns over time should be a priority for most investors right now. Yes, growth-seeking investors who take risks have been rewarded during the record-breaking bull market of the past few decades. However, there is a whole class of investors who have not lived through a crash and have not seen the psychological effects it can have on investors over time. Needless to say, now is the time to seek out defensive stocks.

It’s unclear whether the Federal Reserve will be able to step in and save the day if certain risks, such as a sovereign debt crisis or other monetary policy issues, materialize. As a result, a flight to safety may be in order, but if you’re buying after everyone else has already done so, it means that many hedges are unlikely to be profitable as many believe.

For those looking to adopt a more defensive portfolio stance right now, here are three stocks that I think are worth considering.

Coca-Cola (KO)

Among the world’s largest consumer packaged goods companies, Coca-Cola (NYSE:KO) is best known for its core soft drinks business. However, the company has continued to expand beyond soft drinks, also offering a range of snack products that makes this consumer discretionary stock a value that long-term investors would be wise to consider at any point in an economic cycle.

In both good and bad times, consumers tend to gravitate toward affordable treats that can be purchased in stores or restaurants. As a result, Coca-Cola has built a relatively recession-proof business model. And despite a relatively high multiple of profitability compared to its consumer discretionary peers, it is a brand that has some of the most incredible power in the beverage and snack world.

If a recession is looming, it’s a good idea to have a portion of your portfolio that’s protected from volatility. That’s not to say this stock can’t go down: it’s seen big declines in the past. However, every dip has proven to be a great buying opportunity in hindsight. This is largely due to the prevalence and importance of this global giant.

Berkshire Hathaway (BRK-B)

Warren Buffett is widely regarded as one of the best investors of all time. Berkshire Hathaway (NYSE:BRK-B) represents a group of companies from many sectors of activity. These sectors are distinguished by their cyclical importance and their defensive nature.

Buffett’s investing style has long since changed. It now focuses on buying quality businesses at a reasonable price. In doing so, the investment giant has diversified his portfolio toward high-growth companies. These companies have significant growth potential during bull markets but are defensively positioned during downturns.

For those seeking exposure to technology, industrial, financial, insurance and energy companies, Berkshire’s portfolio of world-class publicly traded stocks stands out as a beacon of hope in this new era of capitalism. You can see why this stock made our list of the best defensive stocks.

Restaurant Brands (QSR)

For investors looking for more international exposure in terms of defensive stocks, Restaurant brands (NYSE:Fast food) is one of the more prominent companies I’ve reviewed in the past. QSR stock is down significantly from its recent high, making now an interesting time to consider adding exposure to this fast food giant.

Restaurant Brands operates a series of world-class quick-service restaurant brands. These include Burger King, Tim Horton’s, Popeye’s and others that have continued to see solid growth. Much of this growth has come from emerging markets. That said, the company is also experiencing strong same-store sales growth in its base.

Over time, I expect Restaurant Brands to be a steady growth stock. Its cash flow could grow based on the population growth seen in its core markets. With a price of 17 times earnings and a dividend yield of 3.4%, this stock has a lot going for it fundamentally. Plus, with a potential recession on the horizon, this is the kind of stock investors might want to own to take advantage of what’s known as the price-cutting effect. That’s where diners opt for cheaper restaurant meals when they’re strapped for cash.

As of the date of publication, the responsible editor did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

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