Market uncertainty is back in full force, and this time, it’s driven by tariffs. U.S. president Donald Trump has once again proposed sweeping tariffs on imports from Canada, Mexico, and China, sending shockwaves through financial markets. Investors are understandably nervous, with markets already showing signs of weakness.
During times of economic uncertainty, reliable dividend stocks offer a safe haven for investors looking to protect their portfolios. Companies that provide essential services tend to be more resilient in market downturns. Fortis (TSX:FTS) and TELUS (TSX:T) are two prime examples of defensive stocks that can provide stability and steady income, even as broader markets react to trade tensions.
Fortis
Fortis is one of North America’s largest regulated electric and gas utilities, serving millions of customers across Canada, the U.S., and the Caribbean. The company operates in a highly stable industry where demand remains consistent regardless of economic conditions. Even in a market downturn caused by tariffs, people will still need electricity and gas, making Fortis an ideal defensive investment.
Financially, Fortis is in excellent shape. The Canadian stock reported revenue of $11.44 billion over the last 12 months, with a profit margin of 14.49%. Net income available to common shareholders came in at $1.59 billion, a solid increase from previous periods. More importantly, Fortis has a history of strong earnings growth, with quarterly earnings rising 6.6% year over year.
But what truly makes Fortis attractive for investors is its dividend track record. The Canadian stock increased its dividend for 50 consecutive years, making it one of Canada’s most reliable income stocks. The current forward annual dividend rate is $2.46 per share, translating to a yield of nearly 4%. With a payout ratio of 73%, Fortis maintains a sustainable balance between rewarding shareholders and reinvesting in growth. For investors worried about market volatility, this kind of dividend consistency is invaluable.
TELUS
In times of economic uncertainty, another essential industry that provides stability is telecommunications. TELUS is one of Canada’s largest telecom companies, offering wireless, internet, and data services to millions of customers. Financially, TELUS is also on solid ground. The Canadian stock reported revenue of $19.96 billion over the past year, with a gross profit of $7.09 billion. Quarterly earnings growth surged 105.9% year over year, a strong indicator of the company’s resilience. With a market cap of over $31 billion, TELUS remains a dominant player in the Canadian telecom space.
For dividend investors, TELUS is especially attractive. The Canadian stock has a history of regularly increasing its dividend, with a forward annual payout of $1.61 per share, equating to an impressive 7.63% yield. That’s significantly higher than most defensive stocks, making it an appealing choice for those looking for reliable income. While the payout ratio is high at over 240%, TELUS generates strong cash flow, which helps support these distributions.
Considerations
Tariffs create a ripple effect across the economy, often leading to increased costs for businesses, supply chain disruptions, and higher prices for consumers. Historically, markets have responded negatively to trade wars. During Trump’s previous presidency, tariff battles with China led to stock market volatility and economic uncertainty.
When markets become uncertain, investors often move toward defensive stocks that provide essential services. Companies like Fortis and TELUS are less affected by economic cycles because people continue to pay their electricity, gas, and phone bills regardless of what happens in the broader economy. These companies also tend to have predictable cash flows, making them more reliable in market downturns.
Moreover, dividend stocks provide an additional layer of protection. Even if stock prices fluctuate, investors continue to receive a steady income from dividend payments. Furthermore, both Canadian stocks have ambitious growth plans. Fortis continues to invest in infrastructure and renewable energy projects, ensuring long-term revenue growth. TELUS, however, is expanding its 5G network and digital healthcare services.
Bottom line
Tariffs may create short-term uncertainty, but they don’t have to derail a well-structured investment portfolio. By focusing on defensive dividend stocks like Fortis and TELUS, investors can protect themselves from market volatility while still benefiting from steady returns. Both companies operate in essential industries, have strong financials, and offer reliable dividend income, making them excellent choices in uncertain times.
