Market Correction: 3 Defensive TSX Stocks to Buy and Never Sell

Worried about another severe TSX market correction? Here are three top defensive stocks to buy today, hold for a lifetime, and never sell.

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It has been choppy days for TSX stocks this week. The TSX Index is down 4% since Monday. Really, it should come as no surprise. Canadian stocks have been consistently pushing to all-time highs through October and November and a slight breather was likely called for. Two areas that have been really punished are growth stocks and energy stocks.

For the long-term, I believe these sectors still have solid tailwinds. However, given the new COVID-19 variant, rising inflation, and concerns about a Russian-Ukraine conflict, these TSX segments could still see further volatility.

If you are worried about where the market is headed, it may be time to add some defensive stocks to your portfolio. Three high-quality defensive stocks today are Toronto-Dominion Bank (TSX:TD)(NYSE:TD), Fortis (TSX:FTS)(NYSE:FTS), and Granite REIT (TSX:GRT.UN).

Defensive TSX stock #1: TD Bank

Canadian banks have been great stalwarts for dividend-hungry investors for years. Despite numerous market and economic cycles, they consistently deliver solid earnings growth and attractive dividends.

It has been a really strong year for Toronto-Dominion Bank. Its stock is up 33% year to date. In fact, it is trading just off all-time highs. TD just announced very strong earnings results for its fourth quarter and year-end. Profits in the quarter topped analysts’ expectations by 7% due to solid growth in its retail segment.

The best news is that TD promised to raise its quarterly dividend by 13% to $0.89 per share, putting the forward dividend yield at about 3.7%. Likewise, it authorized a massive 50 million share buyback plan that would cancel around 2.7% of the shares outstanding. All-in, for a nice combination of dividend-growth and inflation-beating capital appreciation, this is a solid TSX stock.

Defensive stock #2: Fortis

Fortis is just a quality, low-volatility stock to hold as an anchor in any portfolio. It operates a diverse array of regulated power and gas transmission utilities across North America. Given that 99% of its business is regulated, it naturally captures a very stable stream of cash flows from its rate base.

The company is investing to continue growing its rate base. Currently, it expects to accrete a 6% rate base growth for the next four-to-five years. Likewise, it expects to grow its annual dividend by around 6%. This TSX stock is a Dividend Aristocrat with 48 consecutive years of dividend growth. Today, it yields an attractive 3.9% dividend. For a stock with bond-like safety characteristics, Fortis is a “sleep-easy-at-night” business to own for a lifetime.

Defensive TSX stock #3: Granite REIT

Granite REIT is one of Canada’s largest industrial REITs. It has a high-quality portfolio of industrial and logistics properties across North America and Europe. Considering the supply chain crunch across the globe, demand for industrial real estate is nearly insatiable. Through the pandemic, Granite had no decline in occupancy, and rental rate growth has been very strong in 2020 and 2021.

This TSX stock has a fortress-like balance sheet and industry-low debt. It has ample dry powder to develop or acquire more properties. Granite pays a monthly dividend that equals an annual dividend yield of 3%. It has raised its dividend for nine years in a row, and Foolish investors can likely expect that to continue going forward.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Robin Brown owns shares of GRANITE REAL ESTATE INVESTMENT TRUST. The Motley Fool recommends FORTIS INC and GRANITE REAL ESTATE INVESTMENT TRUST.

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