With inflation forecasts staying well above the Federal Reserve’s 2% target and rate cuts looking less likely, markets are being forced to rethink how much risk is worth taking. Higher for longer rates, firm jobs data, and sticky energy costs can put pressure on growth stories, but they often shine a light on large, resilient dividend payers that some investors use as anchors in a portfolio. This article looks at three large cap defensive dividend stocks from our screener that are directly exposed to these macro shifts, and explains how the latest Fed signals and energy backdrop could matter for each one.

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Abbott Laboratories (ABT)

Overview: Abbott Laboratories is a diversified global healthcare company that sells medical devices, diagnostic systems, generic drugs and nutrition products, covering areas such as diabetes care, cardiovascular disease, infectious disease testing and infant and adult nutrition.

Operations: Abbott generates about US$22.0b in revenue from Medical Devices, US$9.1b from Diagnostics, US$8.3b from Nutrition, US$5.7b from Established Pharmaceuticals and a small amount from Other, with US revenue of about US$17.2b.

Market Cap: US$157.6b

For investors looking for income and resilience while rates stay higher for longer, Abbott brings together a long dividend record, a broad mix of healthcare businesses and fresh product catalysts such as Libre Duo dual glucose ketone sensors and AI powered heart imaging tools. The stock has faced pressure from high debt, weaker recent earnings, legal issues and integration work after the Exact Sciences deal. Analysts have highlighted expectations for earnings growth and potential upside relative to their price targets and some fair value estimates. For those considering a healthcare dividend payer with meaningful exposure to diabetes, diagnostics and aging population trends, Abbott’s story is more layered than the headline P/E suggests.

Abbott’s broad healthcare engine and dividend record may not be fully reflected in the current P/E, especially with new products coming through. It can therefore be useful to understand the 4 key rewards and 2 important warning signs in the 4 key rewards and 2 important warning signs

Atmos Energy (ATO)

Overview: Atmos Energy is a regulated natural gas utility that distributes gas to about 3.4 million residential, commercial, public authority and industrial customers across eight US states, and also operates pipeline and storage assets that move and store gas for third parties.

Operations: Atmos generates about US$4.6b from its Distribution segment and US$1.1b from Pipeline and Storage, with small eliminations between segments, all from the United States.

Market Cap: US$28.0b

Atmos Energy often attracts income focused investors when rates stay high because it combines a large regulated customer base, visible capital spending on safety and reliability, and a long record of steady dividends. Recent results show solid earnings, firm net margins and ongoing customer additions, while Texas legislation such as HB 4384 supports faster recovery of much of its growing capital spend. At the same time, the company leans heavily on external funding, has dividends that are not well covered by free cash flow, and faces legal and regulatory risks around safety and long term gas demand. Understanding how those trade offs affect earnings durability, dividend quality and valuation is key to assessing Atmos in a higher for longer rate environment.

Atmos Energy’s regulated growth story, with US$5.7b in segment revenue and Texas capital recovery support, can look straightforward on the surface. However, the real tension between earnings resilience, funding needs and dividend strength sits inside the 3 key rewards and 2 important warning signs (1 is major!)

Consolidated Edison (ED)

Overview: Consolidated Edison is a long established utility that delivers electricity, gas and steam to millions of customers across New York City, Westchester and surrounding regions, operating critical infrastructure that keeps the city powered, heated and cooled.

Operations: Consolidated Edison generates about US$11.8b from CECONY Electric, US$3.4b from CECONY Gas, US$858m from CECONY Steam, US$1.0b from O&R Electric and US$349m from O&R Gas, with smaller contributions from transmission and segment adjustments, all in the United States.

Market Cap: US$38.4b

Consolidated Edison provides regulated earnings, a long dividend record and exposure to multi decade grid and electrification spending. Earnings growth around the mid to high single digits, net margins near 12.5% and a P/E close to industry peers have drawn attention from investors who value predictability more than rapid expansion. However, dividends are not well covered by free cash flow and the company leans on external financing, which may be significant in a higher interest rate environment. How its US$29b plus grid upgrade plans and rising power demand interact with funding needs, inflation and interest rate conditions is an important focus for many investors.

Grid spending, regulated earnings and a long dividend history are only half of Consolidated Edison’s story; the real twist sits inside the 4 key rewards and 2 important warning signs (1 is major!)

The three dividend stocks covered here are only a starting point, as the full Large-Cap Defensive Dividend Stocks screener surfaces 20 more companies with similarly detailed stories around payouts, sector resilience and balance sheets that may interest you. Identify and analyze the catalysts that matter most to you, from earnings stability and payout ratios to sector exposure and debt levels, by running the Large-Cap Defensive Dividend Stocks screener.

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Seeking Alternatives Before They Take Off

Fresh stock ideas can gain momentum fast, and the best entry points often appear and disappear while attention is elsewhere, before the crowd reacts. Consider exploring opportunities promptly once you have completed your own research.

• Look for potential breakouts early by scanning under the radar companies using the 21 high quality undiscovered gems before they attract broader mainstream attention.
• Explore structural infrastructure-related opportunities by checking the curated 34 power grid technology and infrastructure stocks while valuations and sentiment may still be changing after recent moves.
• Focus on income generation and potentially lower volatility by reviewing a hand picked 63 resilient stocks with low risk scores that emphasizes balance sheet strength and steadier business profiles.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.