Canadian equity markets have continued their uptrend this month, with the S&P/TSX Composite Index rising by 2.9%. However, uncertainty over the impact of proposed tariffs on imports to the United States and sticky inflation are causes of concern. If you are worried that the equity markets could turn volatile, you can buy the following three defensive Canadian stocks to stabilize your portfolio.
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Waste Connections
Waste Connections (TSX:WCN) is an excellent defensive stock to have in your portfolio due to the essential nature of its business. The waste management company operates primarily in exclusive and secondary markets of the United States and Canada, thus facing lesser competition and enjoying higher margins. It has also expanded its footprint through organic growth and strategic acquisitions, boosting its financials and stock price. Over the last 10 years, the Toronto-based company has delivered 490% returns at an annualized rate of 19.4%.
Moreover, last year was the busiest for WCN, with record acquisitions that could roll over to its 2025 revenue growth. Also, favourable price revisions and higher volumes could boost its revenue growth. Meanwhile, the management expects its top line to grow in the mid- to high single digits. Further, its innovative approaches to employee engagement and improved safety-related metrics have resulted in lower voluntary turnover for eight consecutive quarters, thus driving employee retention. Amid these initiatives, the company expects its 2025 EBITDA (earnings before interest, tax, depreciation, and amortization) to grow in high single digits. Along with its growth prospects, WCN has also rewarded its shareholders with double-digit dividend growth for the last 14 years, making it an excellent buy in this uncertain outlook.
Fortis
Another excellent defensive bet would be Fortis (TSX:FTS), a regulated utility serving 3.5 million customers in the United States, Canada, and the Caribbean. Its low-risk electricity and natural gas transmission and distribution businesses and regulated assets make its financials relatively less prone to macro challenges, allowing it to raise its dividends consistently. The utility company has raised its dividends for 51 years and currently offers a healthy dividend yield of 4.05%.
Fortis is also progressing with its $26 billion capital investment plan, which will expand its rate base at an annualized rate of 6.5% to $53 billion by 2029. Moreover, favourable customer rate revisions and improving operating efficiencies could support its financial growth in the coming years. Given its capital-intensive business, the company could benefit from the central bank’s monetary easing initiatives. Amid these growth prospects, Fortis’s management hopes to continue its dividend growth and expects to raise its dividends by 4-6% annually through 2029.
Enbridge
As my third pick, I have chosen Enbridge (TSX:ENB), a diversified energy company with an excellent dividend payment record. The company transports oil and natural gas across North America and is involved in natural gas utility and renewable energy production businesses. With its businesses underpinned by long-term, take-or-pay contracts and regulated cost-of-service tolling frameworks, its financials are less immune to macro factors. Supported by solid financials, the company has paid dividends for 69 years while raising the same uninterruptedly for 30 years. It currently offers an impressive dividend yield of 5.85%.
Moreover, Enbridge is continuing with its $27 billion secured capital investment plan and expects to put $6 billion of projects into service this year. Also, the company has expanded its utility business by acquiring three assets in the United States, which have made it North America’s largest utility company. Besides, favourable rate revisions, higher asset utilization, and cost savings from system optimization could support its financial growth in the coming years. Considering all these factors, I believe Enbridge is well-positioned to continue its dividend growth, thus making it an excellent buy in this uncertain outlook.
