With 2024 now firmly in the rearview mirror, we can all look back at what was a fantastic year for investors. On our local markets, the S&P/ASX 200 Index (ASX: XJO) rose by a healthy 7.5% – a return that stretches to roughly 11.4% when we account for dividends received. The American markets did even better, though, with the S&P 500 Index adding a whopping 23.3%.
But after these rosy 2024 gains, many ASX investors might be looking for some stable, defensive investments to ride out 2025. After all, the returns of both the Australian and American markets were well above average last year. And the markets do have a sometimes uncomfortable tendency to revert to their mean sooner or later.
With that in mind, let's discuss a pair of defensive ASX shares that I think offer investors stability as we embark upon another year on the stock market.
First up is the leading Australian telco, Telstra. We all know Telstra (and may or may not love it), but I think this company's shares represent a solid and stable investment for 2025. The Telstra share price actually had a fairly poor 2024, treading water for most of the year.
Despite this, the company managed to report some solid earnings and substantially grew its dividend. Today, it offers a hefty (and fully franked) dividend yield of 4.42%.
Telstra is also a highly defensive company. Fixed-line internet and mobile services are essential to modern life, and as such, customers won't want to give them up even if their personal financial circumstances deteriorate. That makes this company's earnings and profits highly stable, which should lend comfort to any investor seeking a reliable investment in 2025.
Our second defensive ASX share is not technically a share at all. Instead, it is an exchange-traded fund (ETF). This particular ETF offers investors a portfolio of global companies that are leaders in providing consumer staples goods. Consumer staples are products that we tend to need, not want. They include food, drinks, household essentials, alcohol, and tobacco.
This ETF houses around 100 of these companies, which hail from several different countries. You'll find some familiar names in the current portfolio, including Coca-Cola, Colgate-Palmolive, Costco, Kraft Heinz and Nestle.
The inherent nature of these products makes, at least in my view, the companies that produce them very stable investments.
After all, we all still need to eat, drink and run our households regardless of how the economy or stock market is doing. I won this ETF in my personal portfolio as a sleep-well investment, and I think it can lend stability as an ASX defensive share to any portfolio in 2025.
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