2024 was a volatile year for many, and 2025 will continue that trend. To counter that market volatility, investors would be wise to consider one or more Canadian defensive stocks.
Fortunately, the market gives us plenty of options to consider when it comes to Canadian defensive stocks. Here’s a look at several to add to your portfolio this year.
Source: Getty Images
Option #1: Fortis
Fortis (TSX:FTS) has become almost synonymous with the term Canadian defensive stocks. For those unfamiliar with the stock, Fortis is one of the largest utilities in North America.
Specifically, Fortis boasts ten operation regions with facilities scattered across Canada, the U.S., and the Caribbean.
Utility stocks generate a recurring and stable revenue stream that is backed by a very lucrative business model. In short, utilities are bound by long-term, regulated contracts to provide utility services.
This means that for as long as Fortis continues to provide utility services, the company generates a reliable and recurring revenue stream. It is that recurring revenue stream that allows the company to pay out a handsome dividend and invest in growth.
In terms of dividends, Fortis’s quarterly dividend currently pays out a handsome 4.13% yield. But that’s not even the best part.
Fortis has provided annual upticks to that dividend for over half a century, and Fortis plans to continue that tradition. That fact alone makes Fortis one of the Canadian defensive stocks to own and a great buy-and-forget candidate.
Option #2: Enbridge
Enbridge (TSX:ENB) represents another of the great Canadian defensive stocks to consider right now. Enbridge is best known for its pipeline segment, but the company also boasts a natural gas utility and a growing renewable energy portfolio.
But what exactly makes Enbridge one of the great Canadian defensive stocks to own?
Apart from its diversified segments, there’s the individual importance and sheer necessity of those segments.
The pipeline segment, which includes both crude and natural gas, hauls massive amounts of both each day. That includes a whopping one-third of all North American-produced crude and one-fifth of the natural gas needs of the U.S.
The renewable energy business boasts a similar appeal, with a generating capacity to power over one million homes. The natural gas utility (the largest on the continent) boasts a similar defensive appeal.
All those segments generate a recurring revenue stream for the company, which allows it to invest in growth and pay a very generous dividend.
As of the time of writing, that dividend equates to a juicy 6.09%, making it one of the better-paying options on the market.
Option #3: Bank of Montreal
It would be hard to compile a list of great Canadian defensive stocks to own and not mention one of Canada’s big banks. Bank of Montreal (TSX:BMO) is the second-largest of the big banks, offering something for both income and growth-seeking investors.
The big banks are stellar investors thanks in part to how their business is structured. Specifically, they offer a mature, well-regulated market in Canada that generates the bulk of revenues.
This, in turn, makes the banks solid Canadian defensive stocks for any investor to own.
That stability also means that the banks have turned in recent years to international markets to fuel growth. And in the case of BMO, that growth comes from the U.S. market, where it enjoys a growing presence.
That growth comes primarily from BMO’s presence in 32 state markets following its acquisition of California-based Bank of the West. That deal saw BMO become one of the larger lenders in the U.S., adding billions in deposits.
As an income stock, BMO really shines. In fact, BMO has been paying out dividends for two centuries without fail. The bank also has an established cadence of providing juicy annual upticks to that dividend, making it yet another buy-and-forget candidate.
As of the time of writing, BMO offers a 4.62% yield.
Canadian defensive stocks to own
The trio of Canadian defensive stocks mentioned above offer both growth and income-earning capabilities. And while no investment is truly without some risk, the above stocks offer significant defensive appeal, making them among the best Canadian defensive stocks to own.
In my opinion, one or all of the above should be core holdings in any well-diversified portfolio.
