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Benjamin Graham, mentor of Warren Buffett, always recommended investing with a margin of safety. He described this concept in Intelligent Investor in detail.

We are concerned about the Fed’s monetary policy and recommend investors play more defensively in the near future to protect themselves from potential inflation. We also believe that it is the right time to follow Graham’s recommendation and invest with a margin of safety.

Below we compiled a list of 21 large-cap defensive stocks that may provide a margin of safety to investors. The market data are sourced from Finviz. All companies in this list have high annualized dividend yields of at least 3%. These stocks also have market capitalizations above $10 billion, current P/E Ratios lower than 20 and maximum total debt/equity ratios of 50%.

Ticker

Company

Dividend Yield

Total Debt/Equity

YTD Return

(NYSE:AFL)

AFLAC Inc.

3.39%

0.25

-35.99%

(NYSE:BLK)

BlackRock, Inc.

3.52%

0.27

-16.18%

(NYSE:BMY)

Bristol-Myers Squibb

4.30%

0.34

20.33%

(NYSE:CCL)

Carnival Corp

3.10%

0.41

-28.67%

(NYSE:COP)

ConocoPhillips

3.95%

0.33

0.71%

(NYSE:CVX)

Chevron Corp.

3.16%

0.1

10.71%

(NYSE:EMR)

Emerson Electric

3.04%

0.48

-18.94%

(NYSE:ETN)

Eaton Corporation

3.42%

0.46

-20.04%

(NYSE:GD)

General Dynamics

3.12%

0.23

-13.61%

(NASDAQ:INTC)

Intel Corporation

3.83%

0.04

7.03%

(NYSE:ITW)

Illinois Tool Works

3.19%

0.39

-14.47%

(NYSE:JNJ)

Johnson & Johnson

3.55%

0.3

6.49%

(NYSE:LLY)

Eli Lilly & Co.

5.22%

0.47

11.53%

(NYSE:MMC)

Marsh & McLennan.

3.12%

0.45

5.38%

(NYSE:NOC)

Northrop Grumman

3.71%

0.33

-6.07%

(NYSE:PFE)

Pfizer Inc.

4.43%

0.47

6.42%

(NYSE:PG)

Procter & Gamble

3.29%

0.47

1.58%

(NYSE:RTN)

Raytheon Co.

4.11%

0.35

-7.32%

(NYSE:SLF)

Sun Life Financial

5.77%

0.34

-12.69%

(NYSE:TRI)

Thomson Reuters

4.22%

0.38

-19.08%

(NYSE:TRV)

The Travelers Co

3.29%

0.26

-8.49%

Bristol-Myers Squibb Company is engaged in the discovery, development, licensing, manufacturing, marketing, distribution and sale of pharmaceutical products on a global basis. BMY has a 4.30% dividend yield and returned 20.33% since the beginning of this year. The stock has a market cap of $52.4B and a P/E ratio of 16.0. Jim Simons invested over $200 million in BMY shares (check out Simons’ top stock picks).

Eli Lilly & Co discovers, develops, manufactures and sells pharmaceutical products. LLY has a 5.22% dividend yield and returned 11.53% since the beginning of this year. The stock has a market cap of $43.4B and a P/E ratio of 8.81. Jim Simons had $388 million in LLY shares at the end of June.

Chevron Corp is engaged in petroleum operations, chemicals operations, mining operations, power generation and energy services. CVX has a 3.16% dividend yield and returned 10.71% since the beginning of this year. The stock has a market cap of $198B and a P/E ratio of 8.62. Phill Gross and Robert Atchinson had $312 million in CVX.

Intel Corporation is a semiconductor chip maker company. INTC has a 3.83% dividend yield and returned 7.03% since the beginning of this year. The stock has a market cap of $115B and a P/E ratio of 10.06. Ken Fisher and Jean Marie Eveillard both had over $300 million invested in INTC (check out Fisher’s top stock picks).

Johnson & Johnson is engaged in the research and development, manufacture and sale of products in the healthcare field. JNJ has a 3.55% dividend yield and returned 6.49% since the beginning of this year. The stock has a market cap of $176B and a P/E ratio of 15.34. Warren Buffett invested over $2 billion in JNJ shares (check out Buffett’s top stock picks).

Pfizer Inc is a research-based, global biopharmaceutical company. PFE has a 3.43% dividend yield and returned 6.42% since the beginning of this year. The stock has a market cap of $141B and a P/E ratio of 16.88. David Einhorn and Ken Fisher both had over $400 million invested in PFE (check out Einhorn’s top stock picks).

Marsh & McLennan Companies Inc is a global professional services firm providing advice and solutions in the areas of risk, strategy and human capital. MMC has a 3.12% dividend yield and returned 5.38% since the beginning of this year. The stock has a market cap of $15.3B and a P/E ratio of 17.29. Andreas Halvorsen invested $223 million in MMC.

Procter & Gamble Co provides consumer packaged goods. PG has a 3.29% dividend yield and returned 1.58% since the beginning of this year. The stock has a market cap of $175B and a P/E ratio of 16.24. Warren Buffett invested $4.9 billion in PG shares.

ConocoPhillips is an international, integrated energy company. COP has a 3.95% dividend yield and returned 0.71% since the beginning of this year. The stock has a market cap of $91.7B and a P/E ratio of 8.41. Warren Buffett invested $2.8 billion in COP. Jean Marie Eveillard also had $438 million in COP at the end of June.

Source: 21 Ben Graham Stocks For Defensive Dividend Investors