In volatile markets it is often advisable to strengthen your portfolio with a number of defensive shares to help limit its overall risk. Defensive shares are often characterised as regular dividend payers, with steady earnings growth, and most importantly, low betas.

For me AGL Energy Ltd (ASX: AGL) represents the typical defensive share on the Australian Stock Exchange with its steady earnings, strong dividend, and low beta of 0.66. Over the last five years the average annual return that AGL has provided investors is 10.9%. The utilities industry is highly competitive, but AGL has a strong market presence and its online sign-up has been revamped to good effect. In the digital era I feel it is imperative for a company like AGL to accommodate sign-ups online and make them as effortless as possible.

The shares are yielding a fully-franked dividend of 3.5%, which is expected by analysts to grow by a steady 4.6% per annum in the future, which is approximately the same rate as it is believed earnings will grow. As the payout ratio is a healthy 67%, I believe it can comfortably raise its dividend without putting any strain on the company’s balance sheet.

For me, AGL is the best pick of the utility companies and I would choose it over the struggling Origin Energy Ltd (ASX: ORG).

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) is another share that I believe would offer stability to many portfolios thanks partly to its beta of 0.50.

At a price-to-earnings ratio of 34, the shares are trading at a premium to much of the industry. But due to the current earnings growth prospects it has, brought about by the strong US dollar and lower input costs, the market appears to be happy to pay over the odds.

In recent times the company has lowered costs by moving its manufacturing to Mexico to benefit from the cheap labour there. Instead of manufacturing in the United States, it will now use a direct sales strategy to conduct business there. The savings from this will be a great boost to the bottom line numbers, allowing for consistent earnings growth in the future.

One of its key growth markets will be the sleep apnoea market. Fisher & Paykel does have stiff competition in the sleep apnoea industry with RedMed Inc. (CHESS) (ASX: RMD), but with the size of the market expected to grow by 7.7% per year until 2020, I’m sure there’s plenty of revenue to be found for both companies.

Fisher & Paykel do pay a dividend, but due to the high price-to-earnings ratio it is on the smaller side at present and yields just 1.9%. I believe the market is looking for share price gains here, rather than an income. In time, as growth slows and the company matures, I expect the price-to-earnings ratio will gradually fall in line with the market and the dividend will start to yield around 4.75% or higher.

Foolish takeaway

In my opinion these two shares would be good additions to a portfolio in need of a lower level of risk. Both shares offer growth and dividends, as well as that all important low beta.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.