Don’t let your guard down amid the February tariff pause. Undoubtedly, the countdown is on to avoid Trump tariffs being slapped on for March. Though it’s tough to tell what we’ll be in for, I think it makes sense to consider some of the durable Canadian dividend stocks that can hold up in the face of headwinds that may very well halt the TSX Index’s impressive rally in its tracks.
At the end of the day, investors should be ready to ride out a storm and focus on the long-term horizon at hand. Indeed, no tariffs between allies would be ideal. But even if tariffs do come online, they aren’t going to last forever. And they shouldn’t cause you to throw in the towel on your long-term-focused portfolios, especially if you’re in it for the next 10 years or more.
Undoubtedly, headwinds and surprises of all sorts will rattle investors. If you’ve got the right temperament, though, you can stay the course and even seize opportunities as they come to be, typically when other investors are running scared. If you’re looking for Steady Eddies to pick up this February, this pair ought to be considered if you’re looking to buy reliable income stocks on the cheap!
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Hydro One
With a virtual monopoly (or at least a very wide economic moat) around Ontario’s transmission line market, Hydro One (TSX: H) is one of those lowly correlated defensive dividend stocks that can hold up even when the broad market is in panic mode, either due to some artificial intelligence (AI)-related event (think DeepSeek and the implications on AI companies), central bank shift of tone (think the U.S. Federal Reserve or Bank of Canada), tariff talks, or just about anything else. Indeed, Hydro One is one of those stocks that seem to have the best chance of being in the green on those really red days for markets. Of course, there are no guarantees with any so-called bond proxy in the equity markets!
Either way, Hydro One’s stable cash flows are a reason to treat the safe-haven utility as a mainstay for the more conservative side of your portfolio. Sure, good news (no tariffs and perhaps a new trade deal?) could outweigh bad news for the year.
However, smart investors consider the downside risks and potential for surprise as well. That’s why H stock looks so intriguing, especially while it’s off 7% from its all-time highs. The 2.8% dividend yield isn’t huge, but the low beta, 0.34, does entail less correlation with the equity market. Combined with a steady dividend-growth plan, H stock is an absolute gem if you’re looking for more of a cautiously optimistic tilt going into the Spring season.
Fortis
Fortis (TSX: FTS) stock has been a relatively weak performer of late, gaining a mere 6.6% in the past five years. Undoubtedly, the utility firm has really dragged its feet versus the market. However, the 3.95% dividend yield remains attractive, especially if investors start taking on a more risk-off approach to markets moving forward.
Indeed, 25% tariffs (or more in response to retaliatory tariffs) could lead to a nasty trade war and substantial pain for various stocks. Though Fortis is no winner from tariffs, I see it as a shelter of sorts for those who fear the return of a bear market. Remember, bear markets can strike when we least expect it. And the hit is harder when we don’t see it coming. All considered, Fortis’s highly regulated cash flow stream can help investors get great sleep, even amid rising macro question marks.
