As macroeconomic uncertainties and ongoing U.S.-Canada trade negotiations continue to weigh on investor sentiment, the Canadian stock market has turned volatile. In times like these, it’s wise to add some safe stocks to your portfolio, and consumer defensive stocks could give you a great way to add stability and consistent returns in the long run.
These companies usually provide essential goods and services that people rely on regardless of economic conditions, making them resilient during temporary market downturns. In this article, I’ll highlight two top defensive consumer stocks that could help protect your portfolio from potential downturns while delivering steady growth and dividends.
Loblaw stock
Loblaw Companies (TSX:L) is the first consumer defensive stock you can rely on in uncertain times. This Brampton-based company has been a household name in Canada for decades, running some of the biggest grocery and pharmacy chains in the country, including brands like Loblaws, Shoppers Drug Mart, No Frills, and T&T Supermarket.
After surging by 34% over the last year, its stock currently trades at $179.93, giving the company a market cap of $54.2 billion. It also pays a quarterly dividend with an annualized dividend yield of 1.1%.
When it comes to financials, Loblaw continues to deliver stable growth. In its latest quarter ended in September 2024, the company’s revenue rose 1.5% YoY (year over year) to $18.5 billion. While its food retail same-store sales only ticked up 0.5%, drug retail performed better, with pharmacy and healthcare services up 6.3% YoY. For the quarter, Loblaw’s operating profit also saw a solid jump of 24% from a year ago to $1.32 billion, helping its adjusted earnings climb 10.6% to $2.50 per share.
Notably, the Canadian food and pharmacy retailer registered a strong 18.5% YoY jump in its e-commerce sales last quarter, which reflects strong digital momentum. Whether the economy is booming or facing a downturn, consumers still need groceries and medicines, and this is exactly what makes Loblaw’s business relatively recession-proof. Besides that, its focus on expansion plans makes it even more attractive to hold for the long term.
Metro stock
Metro (TSX:MRU) is another solid defensive stock from the consumer sector that deserves a place in every Canadian investor’s portfolio. This Montreal-based food and pharmacy retailer runs some of the country’s most well-known grocery and drugstore brands, including Metro, Super C, Food Basics, and Jean Coutu.
Following over 30% gains in the last 12 months, MRU shares trade at $92.97 with a market cap of $20.6 billion. Investors looking for steady passive income may also like its quarterly dividend, which currently offers an annualized yield of 1.6%.
In the December 2024 quarter, the Montreal-based company’s sales climbed by 2.9% YoY to $5.1 billion with the help of a 5.5% same-store sales growth in its pharmacy segment. Its online food sales also jumped by 18.6% from a year ago. These positive factors drove Metro’s quarterly net profit up by 13.6% YoY to $259.5 million.
As the company continues to focus on major supply chain upgrades to boost efficiency and support future expansion, its long-term growth outlook remains strong, making MRU a solid pick for cautious investors.
