Defensive Investors: 3 Stocks to Shore Up Your Portfolio

Fortis is a defensive stock with an impressive track record.

| More on:
A worker overlooks an oil refinery plant.

Source: Getty Images

Are you looking for defensive stocks to shore up your portfolio? If so, you’re probably making a good move. In today’s market, many stocks are getting expensive. Last year saw a prolonged bear market brought on by rising interest rates and poor earnings releases from big tech companies. This year, both factors appear set to continue: the Fed still has at least one more rate hike up its sleeve, and tech companies’ fourth-quarter results were not very impressive.

The tech bear market reversed due to artificial intelligence (AI) hype, but it’s not clear how AI will impact earnings just yet. At today’s level, defensive stocks may be better buys than tech stocks. With that in mind, here are three defensive stocks to shore up your portfolio.

Fortis

Fortis Inc (TSX:FTS) is a Canadian utility stock that is well known for its dividend growth track record. The company has paid a dividend ever since it was founded, and has raised the dividend every single year for 49 consecutive years. Without question, FTS has one of the best dividend growth track records on the TSX. If Fortis does another dividend hike next year, it will upgrade from its current status as a dividend aristocrat to that of a dividend king – a stock with 50 years of dividend growth.

Will Fortis be able to pull that off? Possibly so! As a utility, Fortis provides an essential service that is highly regulated and protected from competition. Some utility stocks are suffering from high interest rates this year, but Fortis is still doing well. In its most recent quarter, it grew its earnings by 8% and hiked the dividend 6%. So, the dividend growth was not ahead of the growth in the whole business – a very encouraging sign.

Royal Bank

The Royal Bank of Canada (TSX:RY) is a very stable and dependable Canadian bank. It is well known for its Canadian retail bank, and also does investment banking in the U.S. and wealth management in the Caribbean. RY stock has a lot of things going for it. For one thing, it managed to achieve slight but positive earnings growth in its most recent quarter (2%), in a period when many companies saw their earnings decline. Also, it has a major deal in the works to acquire HSBC Canada from HSBC, which could bring a positive earnings impact. Finally, like all banks, RY can collect higher revenue when interest rates rise, making it uniquely suited to today’s economic climate. All-in-all, Royal Bank is very much a defensive stock worthy of a look.

Alimentation Couche-Tard

Alimentation Couche-Tard Inc (TSX:ATD) is a Canadian retail stock best known for its Circle K convenience store chain. It bought the chain from a U.S. company in the 2000s, and proceeded to grow it in Canada by taking over gas station chains. ATD made a lot of money last year thanks to rising oil prices – part of its revenue comes from royalties on fuel sales. Oil prices are going down now, so we’d expect ATD’s earnings growth to cool off. However, the company has a very good overall strategy, which involves growing organically by re-investing its own earnings, instead of aggressively borrowing. With disciplined companies like this, great things can happen.

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.

HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. Fool contributor Andrew Button has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alimentation Couche-Tard. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Man data analyze
Dividend Stocks

3 Top Dividend Stocks I Can’t Wait to Buy in 2023

Top Dividend Aristocrats are worth buying in almost every market, especially if you hold them long term. However, weak markets…

Read more »

financial freedom sign
Dividend Stocks

Buy 2,911 Shares in This TSX Stock for a Shot at $1 Million in 32 Years

You might not see insane growth overnight, but you won't see insane drops either from this TSX stock offering a…

Read more »

Technology
Dividend Stocks

A Dividend Heavyweight I’d Buy Over Enbridge Right Now

BCE Inc. (TSX:BCE) is a dividend heavyweight I prefer over Enbridge Inc. (TSX:ENB) due to its value and impressive income…

Read more »

Hour glass and calendar concept for time slipping away for important appointment date, schedule and deadline
Dividend Stocks

2 Best Monthly Dividend Stocks for March 2023

There are plenty of monthly dividend stocks to buy right now, but prospective investors should take a closer look at…

Read more »

A bull and bear face off.
Dividend Stocks

The 3 TSX Stocks to Buy Before a Long-Term Bull Market Begins to Build

The TSX may not go bullish for a while, even when the economy recovers from a recession, but investors should…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

TFSA Investors: Make $200 in Monthly Passive Income With This 1 TSX Dividend Stock

Here’s an attractive dividend stock TFSA investors can buy now to earn $200 in monthly passive income.

Read more »

A plant grows from coins.
Dividend Stocks

TFSA Investors: How to Create $40,000 in Returns and Passive Income in 30 Years

If you think you'll need just $40,000 in passive income per year in retirement, your TFSA can get you there…

Read more »

stock analysis
Dividend Stocks

Buy These TSX Dividend Shares Next Week

Are you looking for dividend stocks to add to your portfolio? Buy these picks next week!

Read more »