Investor sentiment has improved since Donald Trump’s election victory. The FTSE 100 is trading at a similar level to that prior to the election, while the S&P 500 is up by around 3% over the same period.

While investors may stay risk-on in the short run, over the medium term there’s likely to be a fall in sentiment as Trump takes office. He’s likely to make major changes on an economic and social level in the US. Whether those policies are successful or not, they’re set to represent a significant change from the status quo. As such, holding defensive stocks with reliable earnings outlooks could be a prudent step for Foolish investors.

A defensive growth stock

Clearly, obtaining defensive characteristics alongside an upbeat growth outlook is the best of both worlds. In this sense, Diageo (LSE: DGE) has huge appeal. Its bottom line is forecast to rise by 16% in the current year, which is roughly twice the wider market’s growth rate.

Looking further ahead, the beverages company has bright growth prospects due to its exposure to China, India and other emerging economies. As wages and wealth increase across the developing world, demand for spirits and other alcoholic beverages is likely to rise. This should provide Diageo with an economic tailwind in future years.

Alongside its growth potential, Diageo also has defensive characteristics. Demand for alcoholic drinks is relatively stable since many consumers consider them to be staple goods. Therefore, even if changes brought about by Trump cause uncertainty to rise and the world endures a challenging economic period, Diageo’s sales and profitability should perform well on a relative basis. In addition, its yield of 3.1%, which is covered 1.65 times by profit, adds to its defensive appeal. Therefore, buying it now could be a shrewd move.

An enviable track record

Of course, when it comes to dividends, few companies can match the appeal of British American Tobacco (LSE: BATS). It currently yields 3.7% and has increased dividends per share at an annualised rate of 5.4% during the last five years. This has meant that investors in the stock have seen their incomes rise even after inflation, which could be a major plus under a Trump administration.

Trump intends to lower taxes and raise spending levels. This could cause inflation to increase in the US, which could help to bring the world out of its deflationary cycle which has been a major theme in recent years. As such, owning shares that offer rapidly rising dividends could help investors to nullify the damaging effects of higher inflation on income levels and portfolio valuations.

British American Tobacco’s dividend is covered 1.5 times by profit, which indicates that there’s scope for further growth in future. Its move into e-cigarettes could boost earnings and dividends, while pricing power should mean that its growth is relatively linear.

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Peter Stephens owns shares of British American Tobacco. The Motley Fool UK has recommended Diageo. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.