3 Defensive Stocks to Protect Your Portfolio in a 2026 Downturn

As investors brace for potential volatility in 2026, identifying stocks with a proven track record of resilience during market downturns is critical. Defensive stocks-those in sectors less sensitive to economic cycles-can serve as a buffer against portfolio erosion. A review of the 2022 bear market, when the S&P 500 plummeted by over 19% according to market analysis, reveals three standout performers: AbbVie (ABBV), Eli Lilly (LLY), and Chevron (CVX). These companies not only weathered the storm but outperformed the broader market, offering compelling cases for strategic, risk-mitigated investing.

1. AbbVie: A Healthcare Sector Powerhouse

AbbVie's stock surged 19% in 2022, bucking the trend of the broader market's decline. This resilience stems from its robust healthcare fundamentals, particularly in immunology, where drugs like Skyrizi and Rinvoq have become top revenue drivers. The company's trailing 12-month dividend for 2022 totaled $5.64, translating to a 3.1% yield, a figure that underscores its appeal to income-focused investors.

Healthcare stocks are historically defensive, as demand for medical treatments remains stable regardless of economic conditions. AbbVie's ability to grow its dividend consistently-boosted by its strong cash flow-further cements its position as a reliable holding during downturns. As noted by a report, "stable fundamentals and growth in key therapeutic areas" make it a standout in a sector known for its resilience.

2. Eli Lilly: Innovation-Driven Growth

Eli Lilly's stock price soared 32% in 2022, outpacing both the S&P 500 and its healthcare peers. This performance was fueled by the commercial success of GLP-1 drugs Mounjaro and Zepbound, which propelled sales from under $29 billion in 2022 to over $59 billion in the following four quarters. While its dividend yield of 0.6% during this period was modest, the company's focus on innovation and blockbuster drug development positions it as a growth-oriented defensive play.

The healthcare sector's inherent stability, combined with Eli Lilly's ability to capitalize on unmet medical needs, highlights its potential to thrive even in challenging markets. observed, "the healthcare sector demonstrated resilience during the downturn, and Eli Lilly's strong fundamentals and growth-oriented products contributed to its outperformance."

3. Chevron: Energy Sector Resilience

Chevron's stock performance in 2022 exemplifies the energy sector's ability to thrive amid market turbulence. The company's trailing dividend yield of 3.57% in 2022 was bolstered by an annual dividend of $6.04 per share, while high oil prices drove revenue to $244.3 billion. Despite the energy sector's long-term underperformance relative to the S&P 500 in seven of the last 10 years, 2022 was a notable exception. Geopolitical events, such as the Russia-Ukraine conflict, drove energy prices upward, making exploration and production companies like Chevron significant contributors to the S&P 500's earnings growth.

Chevron's disciplined capital allocation strategy-prioritizing shareholder returns through dividends and buybacks-further strengthens its case as a defensive stock. noted, the company's "robust forward dividend yield of 4.57%" reflects its commitment to rewarding investors even in volatile environments.

Conclusion: Strategic Diversification for 2026

While no stock is immune to market volatility, AbbVie, Eli Lilly, and Chevron have demonstrated the hallmarks of defensive investing: sector resilience, strong fundamentals, and consistent returns. AbbVie and Eli Lilly benefit from the healthcare sector's stability, while Chevron's energy exposure aligns with cyclical demand patterns that can offset broader market declines.

For investors seeking to protect their portfolios in 2026, these three stocks offer a balanced approach-combining income generation, growth potential, and historical performance during downturns. As the market navigates uncertainty, a diversified portfolio anchored by such resilient holdings could provide both security and opportunity.