With the Federal Reserve set to announce its final policy decision of 2025 on Wednesday, investors are rotating into defensive positions.
More than the rate-cut possibility (which is around 90% as per recent estimates), the traders are worried about whether the central bank will signal more easing ahead or take a harder stance.
That uncertainty has sparked renewed demand for stocks that hold steady regardless of economic conditions.
Here are five names gaining traction among traders seeking shelter before potential volatility hits.
5 stocks gaining traction ahead of Fed decision
1. Johnson & Johnson stands out as a classic defensive anchor.
The pharmaceutical and healthcare giant has raised its dividend for 63 consecutive years and currently yields 2.58%, with an annual payout of $5.20 per share.
JNJ trades near $202.50 with a reasonable payout ratio of roughly 50%, leaving room for future increases.
2. Coca-Cola offers similar shelter as the KO’s beverage empire generates predictable revenue from products people buy in boom or bust.
Its global reach and established brand portfolio provide pricing power even when consumers tighten spending.
The company maintains one of the strongest dividend histories on Wall Street and currently yields around 3.0%, attractive for income-focused traders seeking stability during rate volatility.
3. Procter & Gamble dominates the household and personal-care products globally, with brands that command loyalty regardless of economic conditions.
Analysts rate PG a “Buy” with a 12-month price target of $174.43, implying 26% upside from current levels near $139.50.
The company has consistently increased dividends and boasts strong free cash flow generation.
4. Duke Energy represents the utility sector’s appeal to defensive investors. DUK yields 3.56% with a $4.26 annual dividend and boasts 20 consecutive years of dividend increases.
The company serves nearly 10 million customers across the Southeast with predictable, regulated revenues and a 5–7% earnings growth forecast through 2028.
5. NextEra Energy, the nation’s largest renewable and nuclear operator, yields 2.91% with plans to boost dividends 10% annually through 2026.
NEE has outperformed DUK over the past decade, benefiting from surging demand for power from data centers and AI infrastructure.
Goldman Sachs projects data-center power demand could grow 160% by 2030.
Seeking shelter before Powell speaks
Defensive stocks typically cushion portfolios when rate or macro surprises spook markets.
History shows that healthcare, staples, and utilities stocks tend to hold their own during Fed decision weeks.
The dividend yields across this list, ranging from 2.6% to 3.6%, also appeal to income investors concerned that Treasury yields may not rise further if the Fed signals patience on future cuts.
That said, rising rates can compress valuations for dividend-heavy names. Higher discount rates theoretically lower the present value of future dividend streams.
Wednesday’s Fed decision and Powell’s comments will set the tone.
If the central bank delivers a dovish cut and hints at more easing, growth stocks could rally, limiting upside for these defensive plays.
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