Investors know the stock market can feel like a roller-coaster ride. It’s exciting when markets soar but nerve-wracking when downturns appear. Lately, whispers about an upcoming market correction are getting louder, prompting investors to reconsider their portfolio strategies. One popular move during uncertain times is to shift towards defensive stocks. These companies typically sell essential products or services, ensuring stability even when economic conditions sour. So, let’s look at two standout defensive stocks on the TSX: Metro (TSX: MRU) and Fortis (TSX: FTS).
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Metro
Metro is a household name across Canada, operating supermarkets and pharmacies that millions rely on daily. When markets stumble, people don’t stop buying groceries or medicine, which keeps Metro’s sales steady. In its most recent earnings report for the first quarter of fiscal 2025, Metro posted sales of $5.12 billion. That marked a healthy increase of 2.9% compared to the same quarter last year. Food sales grew modestly by 1.0%, adjusted to 2.4% when accounting for timing differences. Metro’s pharmacies performed even better, with same-store sales up 5.1%, driven by stronger prescription demand. This balanced growth highlights Metro’s resilience, making it an attractive defensive choice.
Another appealing aspect of Metro is its consistent commitment to shareholders through dividends. Recently, Metro announced a quarterly dividend of $0.37 per share, a notable 10.4% increase from last year. This marked Metro’s 31st consecutive year of dividend hikes. Such consistent increases reflect Metro’s financial strength and stability, characteristics that can reassure nervous investors during unpredictable markets.
Metro also keeps innovating to maintain customer loyalty. The recent launch of its MOI Rewards program in Ontario quickly attracted over four million members. Additionally, Metro saw online grocery sales jump 18.6%, boosted by expanded partnerships and convenient click-and-collect services. These initiatives underline Metro’s proactive approach, helping it remain strong regardless of market fluctuations.
Fortis
Another defensive heavyweight investors often turn to is Fortis, a major provider of regulated electric and gas utilities across Canada, the United States, and the Caribbean. Utilities like Fortis are well-known for stability since demand for electricity and gas doesn’t vanish during tough economic times. This consistent need creates predictable revenue, a cornerstone of defensive investing.
In its latest annual earnings for 2024, Fortis reported net earnings attributable to shareholders of $1.6 billion, or $3.24 per share. That’s up from $1.5 billion, or $3.10 per share, the previous year, thanks to steady rate-base growth and new rates at utilities like Tucson Electric Power and Central Hudson. These numbers demonstrate Fortis’s ability to steadily grow profits, making it a reliable defensive stock.
Fortis isn’t just maintaining its stability. It’s actively planning for future growth. Last year, the defensive stock invested a record $5.2 billion in capital improvements. Its ambitious five-year plan involves spending $26 billion more through 2029. This significant investment aims to increase its rate base from $39 billion to $53 billion, indicating solid, ongoing growth. Such growth strategies suggest Fortis will remain robust, offering investors comfort during shaky markets.
Fortis also rewards shareholders consistently. The defensive stock recently raised its dividend for the 51st consecutive year, increasing it by 4.2% to $2.39 per share annually. Few companies boast such a long streak of dividend increases, highlighting Fortis’s reliability and appeal as a defensive investment.
Bottom line
Both Metro and Fortis offer investors stability, growth potential, and reliable dividends — qualities that become especially valuable when markets face correction risks. Metro’s consistent grocery and pharmacy sales ensure regular income, coupled with proactive innovations to retain customer loyalty. Fortis, meanwhile, offers predictable earnings from its regulated utility operations, supported by substantial investments that promise continued growth.
Investing in these defensive stocks can be a wise move for anyone feeling cautious about the market’s next moves. While no stock is completely immune to market volatility, choosing businesses like Metro and Fortis, with proven resilience and essential products, can help protect your portfolio. After all, peace of mind can be as valuable as profit, especially when markets start to wobble.
