Defensive stocks are considered relatively stable due to several key factors. Firstly, these stocks belong to industries that provide essential goods and services, such as healthcare, utilities, consumer staples, and telecommunications. These industries tend to be less susceptible to economic downturns, as demand for their products remains relatively consistent regardless of the overall economic conditions.

Secondly, defensive stocks often have a history of stable and predictable earnings and cash flows. This stability stems from the fact that consumers continue to purchase essential items even during economic hardships. As a result, companies in defensive sectors can maintain consistent revenue streams, which translates into more stable stock prices.

Additionally, defensive stocks typically offer dividends. The reliable cash flows generated by these companies allow them to consistently distribute dividends to their shareholders, attracting investors seeking regular income.

Lastly, defensive stocks tend to have lower volatility compared to other types of stocks. During periods of market turbulence or economic uncertainty, investors often seek out defensive stocks as a safe haven, leading to increased demand and relatively stable prices.

Overall, the combination of resilient industries, predictable earnings, dividend payments, and lower volatility contributes to the perception of defensive stocks as relatively stable investments.

Defensive stocks are considered relatively stable because they belong to industries that provide essential goods and services, such as utilities, healthcare, and consumer staples, which remain in demand regardless of economic conditions. These stocks are less sensitive to economic downturns since people continue spending on necessities like food, medicine, and electricity even during recessions. Companies in defensive sectors often have steady cash flows, reliable dividends, and lower volatility compared to cyclical stocks. Their earnings and revenues are more predictable, making them attractive to risk-averse investors seeking stability during market uncertainty. Additionally, defensive stocks tend to outperform during bear markets, acting as a cushion in diversified portfolios. While they may not offer explosive growth during bull markets, their resilience makes them a preferred choice for long-term, conservative investors prioritizing capital preservation over high returns.