Investors chasing stability in an unpredictable market often turn to ASX defensive stocks. These businesses are typically less cyclical, and less sensitive to changes in the underlying economy.
Defensive stocks don't generally deliver the rapid capital growth that can be achieved with growth stocks, but have their own advantages for investors.
Brokers have recently listed two ASX defensive names as buys in 2025: Telstra Group Ltd (ASX: TLS) and NIB Holdings Ltd (ASX: NHF).
Let's take a look at each in closer detail.
Defensive stocks in favour
Telstra has long been a reliable performer for income-focused investors. Being Australia's largest telco provider, it has its roots set firmly into the soil of society.
Goldman Sachs is backing Telstra with a buy rating and a price target of $4.35, around 7% upside potential at the time of writing.
It reckons the defensive stock has "a meaningful medium term opportunity to crystallise value" given the company's efforts to monetise its National Broadband Network (NBN) assets.
Goldman says Telstra's recurring NBN payment streams are "inflation-linked" and provide "long duration cash flows" potentially worth $14.5 billion to $18 billion.
Meanwhile, UBS is equally bullish.
It forecasts earnings per share (EPS) to reach 19 cents in FY25, supported by mobile price increases and ongoing cost-reduction efforts.
UBS projects Telstra to hit $23.8 billion in revenues next year, which could produce dividends of 19 cents per share.
Why NIB Holdings deserves attention
NIB Holdings is in the health insurance business, another defensive domain. The stock has been punished this year, down 25% at the time of writing.
Goldman Sachs also rates NIB as a buy, with a price target of $6.50, representing 17% upside potential from current levels.
The broker likes this ASX stock due to its "defensive exposure" to the health insurance sector.
It is also bullish on NIB's consistent policyholder growth, which has surpassed the broader industry.
Goldman projects NIB to earn 45 cents per share in FY26, up from 38 cents per share in FY25. It also expects the company to pay dividends of 30 cents per share by then.
Meanwhile, UBS is also bullish on the defensive stock, rating it a buy with an $8.50 price target.
UBS also says NIB is well positioned given its policyholder growth, and with inflation moderating, should see improvements in its New Zealand operations.
Foolish takeout
These ASX defensive stocks are recommended as buys from brokers who rate their prospects highly.
Telstra's stronghold on the local telco market along with its footprint in the NBN are standouts, whereas brokers like NIB given its defensive nature in the health insurance industry.
In the last 12 months, Telstra is up 5.45%, whereas NIB is down 25.27%.
