7 Dividend Stocks to Withstand a Market Downturn

The uptrend in the S&P 500 has stalled out in recent weeks, and the widely watched index is down a little more than 2% over the last month. The pullback in the market coincides with increasing concerns over a slowdown in global economic growth, a re-flaring of the European sovereign debt crisis, and jitters about another summer sell-off. Make no mistake, many traders and investors may be eying the exits, as the old adage "sell in May, and go away" has proven prescient in recent years. While it is possible that the market dip will prove to be temporary, caution may be warranted as summer approaches. Investors who are unwilling to cash out their chips completely may want to rotate into defensive dividend stocks which should hold up better than the broader market in the event of a protracted sell-off. In order to pinpoint some of the most promising places to hide out if volatility reappears with a vengeance, I ran a stock screen looking for consumer staples names with market caps above $10 billion, forward P/E ratios below 15, dividends above 3% and betas (a measure of risk) below 0.5. Below, I highlight the 7 names that met this criteria.

- This stock is a prototypical defensive play and should hold up well if the broader market tanks. At current levels, CPB is yielding 3.46% and the stock is relatively inexpensive with a forward P/E of 13.34. Year-to-date, CPB has added 0.75% and over the last 52 weeks it is up a little less than 2%. With a beta of just 0.29, CPB is not highly correlated to the market. While this name underperforms during bull runs, it makes up for it by being a safe hiding spot when things turn south.

- Like many of the names on this list, GIS is in the food business, which is significantly less cyclical than other areas of the market. At current levels, GIS is yielding 3.15% and the stock trades at a forward P/E of 14. Shares have lost 4.23% in 2012, but have added 2.08% over the last 52 weeks. The stock is hardly correlated to the broader market at all with a beta of 0.18 and could see inflows if fear continues to pick up.

- This is General Mills' sister company, and the stock benefits from the same qualities. Shares trade at a forward P/E of 13.51 and the stock currently yields around 3.20%. Kellogg sports a low beta of 0.45. K has fallen 0.44% in 2012 and a recent disappointing earnings report has led to a near-term sell-off in the name. Over the last 52-weeks, K is down a little more than 9%.

- This company manufactures and markets a line of household goods and is somewhat shielded from market volatility due to its consistent business lines. The stock currently yields 3.78% and trades at a forward P/E of 14.20. With a beta of just 0.33, KMB has a good chance of holding up during a correction. Year-to-date, shares have risen nearly 7%. During the last 52-weeks, KMB is up almost 19% and is currently sitting at all time highs.

- Tobacco stocks have been in a powerful bull market in recent years and LO is currently sitting at all-time highs. Lorillard has been providing investors with the best of both worlds - a defensive profile combined with a sharply increasing share price. The stock currently yields an extremely attractive 4.61% and is not terribly expensive with a forward P/E of 13.65. Shares have jumped almost 18% in 2012 and are up more than 35% over the last year. Simply put, this is one of the most attractive stocks in the market and will likely continue to reward shareholders going forward.

- This is another tobacco name that has produced stellar returns through dividends and share appreciation. At current levels, MO is yielding a whopping 5.18% and the stock trades at a very reasonable forward P/E of 13.43. MO has a beta of 0.39 and is not highly correlated to the broader stock market. The stock has gained a little less than 7% in 2012 and is up an awesome 21% over the course of the last year.

- This is an amazing company, which can provide investors with growth, dividends, and a defensive profile. At current levels, PEP yields 3.10% and trades at a forward P/E of 15. This is one of the premier companies in the world and would make a good core holding for long-term investors. Year-to-date, shares have risen a little less than 1% and have lost a little more than 1% on the yearly chart. Despite its recent underperformance, PEP has been a winner over the long haul and could continue to grow as a result of its global footprint and premier brand moat.