Consumer staples, utilities and healthcare are reasonable places to begin researching stocks that may hold up better in a recession—but none is recession-proof, and no single 2025 ranking establishes the best stock to buy. Fidelity’s analysis of 1962–2021 business cycles found that consumer staples and utilities usually outperformed in late-cycle and recession phases. That history is a starting point, not a forecast. The examples below are research leads, not current buy recommendations.
What “best recession stocks” means
A defensive stock is one whose business may be less exposed to a downturn than businesses reliant on discretionary purchases. People may postpone travel, cars or luxury goods when budgets tighten, while demand for many everyday necessities and essential services can be steadier. That can support earnings resilience, but it does not guarantee a stock will rise, preserve its value or keep paying the same dividend.
Chase investor education describes defensive stocks as more likely to show earnings resilience and steadier dividend payments, while noting they can lag in bull markets. The relevant question is therefore not simply which companies sell necessities. It is whether a company’s finances, valuation and specific risks make its shares suitable for an investor’s circumstances.
Which sectors have a historical defensive case?
Consumer staples
Staples businesses sell goods people may continue buying through economic slowdowns. Fidelity’s sector-cycle analysis covering 1962–2021 found that consumer staples usually outperformed during late and recession phases. This is a long-run historical tendency, not a promise about any particular recession or company.
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The 2025 experience is a useful counterpoint: Fidelity reported that consumer staples widely underperformed the S&P 500 as investors favored growth and artificial-intelligence themes. Relatively resilient demand does not ensure that a sector’s shares will outperform the market; investor preferences and the price already reflected in a stock can matter too.
Utilities
Regulated utility services can be less discretionary than many consumer purchases. Fidelity’s historical sector analysis found utilities usually outperformed in late and recession phases. S&P Global Market Intelligence also reported that utilities traditionally benefited at the onset of recessions during the 2007–2009 financial crisis and the 2020 COVID-19 pandemic.
That pattern has limits. S&P Global Market Intelligence warns that stagflation can erode utilities’ advantage. Utility companies also face fuel, regulatory and weather risks; their debt and capital-spending needs make financing conditions worth examining.
Healthcare
Healthcare is another sector to consider because some medical needs are not easily postponed. MSCI’s USA Defensive Sectors Index includes healthcare alongside consumer staples, energy and utilities. That classification is not a guarantee of recession performance, and healthcare companies can face policy and product risks. A sector label alone does not establish that an individual company’s earnings or share price will be resilient.
Energy is not a simple defensive choice
Energy is included in MSCI’s USA Defensive Sectors Index, but that inclusion does not make every energy company a reliable recession hedge. The sector’s results depend on commodity prices, which can move independently of household demand for essentials. Assess an energy company’s specific business and exposure rather than treating the index classification as a stock recommendation.
Examples to research—not a ranked 2025 list
Kiplinger has named the following companies as recession-resistant examples. They span different kinds of businesses, so they are not directly comparable, and the available evidence does not establish a common 2025 return, valuation or dividend-safety ranking. Their inclusion here is a prompt for due diligence, not an endorsement.
Rank #4
| Company | Category | What to investigate |
|---|---|---|
| Altria | Consumer staples | Assess the company’s earnings outlook, valuation, debt and dividend coverage; do not assume a staples classification makes the shares recession-proof. |
| Digital Realty Trust | Data-center REIT | Examine its debt, refinancing costs, valuation and sensitivity to interest rates. A REIT’s income profile does not eliminate rate or company-specific risk. |
| Lockheed Martin | Defense | Consider its valuation, earnings outlook and exposure to government budgets; defense spending is not the same as recession-insensitive consumer demand. |
| NextEra Energy | Utility | Review its debt, capital-spending needs, valuation, interest-rate exposure, regulation and weather risks. |
The table identifies the research angle implied by each company’s category and the risks investors should investigate; it does not claim that any company passed a financial-quality screen. Current company financials and valuations are not established here, so these examples should not be treated as a current buy list.
How to screen a stock for recession resilience
Use company filings and current financial data to test the business rather than relying on a sector label or dividend yield. A practical comparison should cover these factors:
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- Demand resilience: Ask whether customers can defer the product or service, and how demand might change if unemployment rises or household budgets tighten.
- Balance sheet and cash flow: Review debt, interest coverage, free cash flow and the company’s ability to fund capital spending. A business can sell an essential service and still be financially strained.
- Dividend durability: Check whether operating cash flow covers distributions and whether the company has maintained or grown them through difficult periods. A high yield by itself is not evidence of safety.
- Valuation and financing: Compare the share price with the company’s earnings outlook and consider debt refinancing needs. Utilities, REITs and other income-oriented stocks can be sensitive to bond yields and borrowing costs.
- Industry-specific exposure: Look for policy and product risks in healthcare; fuel, regulatory and weather risks in utilities; commodity-price exposure in energy; and government-budget exposure for defense businesses.
These checks can reveal vulnerabilities that a broad “defensive” label hides. They do not predict whether a stock will outperform during the next downturn.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Why defensive stocks can still lose value
Defensive positioning reduces some exposure to weaker economic activity; it does not remove market, valuation, interest-rate, inflation, policy or company-specific risk. A stock can fall even if demand for its products remains comparatively steady—for example, if investors reassess its valuation or financing costs rise. Stagflation can also weaken the traditional appeal of utilities, as S&P Global Market Intelligence cautions.
Past performance does not guarantee future results. Fidelity’s 1962–2021 sector pattern and the utility examples from 2007–2009 and 2020 describe historical experience, not a reliable timetable for future returns. A concentrated portfolio of defensive names also leaves an investor exposed to risks shared by those companies or sectors. Kiplinger emphasizes that no stock is fully recession-proof and that a balanced portfolio is preferable to concentrating in defensive stocks.
How to use this list in 2026
Because 2025 has passed, this is a guide to the historical case for defensive sectors and to companies cited as examples—not a forecast or a current ranking. Before making an investment decision in 2026, check each company’s latest financial statements, valuation, earnings outlook, debt and dividend coverage. The evidence summarized here does not establish which stock is best at today’s price.
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