The Canadian stock market kicked off 2025 on a strong note, with the TSX Composite gaining over 3% in January, but investors shouldn’t ignore the ongoing macroeconomic uncertainties. With persistent inflation concerns, interest rate expectations, and shifting U.S. trade policies still in play, market volatility could return at any time. In uncertain times like these, defensive stocks could help you protect your portfolio from temporary market downturns and provide much-needed stability by offering reliable dividends.
In this article, I’ll highlight two of the best Canadian defensive stocks that can help protect your portfolio while still providing long-term growth potential.
Brookfield stock
When you’re trying to protect your portfolio from potential market volatility, Brookfield Corporation (TSX: BN) could be a great stock to consider. This global investment giant mainly focuses on managing assets across renewable energy, infrastructure, private equity, and real estate sectors. Over the years, it has built a strong reputation for delivering long-term wealth.
Over the last year, Brookfield stock has jumped by nearly 60% to currently trade at $83.79 per share with a market cap of $138.1 billion. While it isn’t known for high-yield dividends, investors still get a quarterly payout with an annualized dividend yield of 0.5%.
In the third quarter of last year, the company posted a record financial performance as its adjusted earnings climbed by over 15% YoY (year-over-year) to US$0.84 per share. Brookfield’s asset management division led the charge for the quarter, with fee-related quarterly earnings climbing 14% from a year ago with the help of growing inflows from credit funds and insurance. Meanwhile, its wealth solutions business saw earnings double on a YoY basis, supported by its strong annuity sales and the acquisition of American Equity Life.
For Foolish Investors looking for a stable, globally diversified stock that can weather economic ups and downs, Brookfield could be a solid pick. Its ability to generate strong cash flows and strategically reinvest makes it a smart choice for those who want to stay defensive while still trying to capture long-term upside.
Enbridge stock
After diving by nearly 10% in 2023, Enbridge (TSX:ENB) stock staged a sharp rebound last year. Following a 32% jump over the last 12 months, ENB stock currently trades at $62.70 per share with a market cap of $135.6 billion. Even after this strong rally in its share price, the stock also offers an attractive 6% annualized dividend yield right now.
In the trailing 12 months, Enbridge’s total revenue rose 6.1% YoY to $48.6 billion, while its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) climbed by 8.2% to $17.6 billion.
When considering Enbridge stock for the long term, it’s not only about pipelines and energy distribution but also its forward-thinking expansion strategy. The company recently wrapped up a major acquisition, adding over 600,000 new customers to its gas utility business. It’s also investing heavily in renewables, with new solar projects and offshore wind assets, which are likely to boost its clean energy footprint. Given these strong fundamentals, this dividend-paying energy stock could help you navigate tough economic times and stabilize your portfolio.
