Markets rise and fall, sometimes dramatically. While many investors focus on growth stocks, defensive stocks provide a cushion when economic uncertainty sets in. These are companies offering essential services like utilities, telecom, and insurance, ensuring steady revenues regardless of market swings. Defensive stocks may not always generate massive short-term gains but do provide stability and reliable dividends, making them key holdings during market corrections.
Three stocks that fit this profile are Hydro One (TSX: H), Telus (TSX: T), and Intact Financial (TSX: IFC). Each plays a critical role in the Canadian economy and remains resilient in downturns. With interest rates still a concern and economic uncertainty lingering, now is the time to consider these defensive stocks before the next market pullback.
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Hydro One
Hydro One is Ontario’s largest electricity transmission and distribution provider. Unlike energy producers that are impacted by fluctuating oil and gas prices, Hydro One operates a regulated business — therefore offering revenue that is stable and predictable.
For the fourth quarter of 2024, Hydro One reported earnings per share (EPS) of $0.33, up from $0.30 in the previous year. This was largely due to approved rate increases and cost control measures, offset slightly by lower peak demand. Revenue stood at $2.1 billion, marking a $116 million increase year over year. Despite concerns about economic slowdowns, Hydro One’s earnings remain stable because electricity is an essential service.
As of writing, Hydro One’s stock traded at $47.68, near its 52-week high of $48.58, with a market capitalization of $28.58 billion. The stock’s price-to-earnings (P/E) ratio is 24.77, reflecting investor confidence in its stability. It also offers a dividend of $1.26 per share annually, yielding 2.63%. While the yield isn’t the highest on the market, it’s backed by a highly reliable revenue stream.
Telus
Telus is one of Canada’s largest telecom providers, offering mobile, internet, and television services. In an increasingly digital world, these services are essential, making Telus a strong defensive play. Whether the economy is booming or slowing down, people still need internet and mobile connections.
For its latest quarter, Telus continued to see steady growth, driven by higher customer additions and demand for its 5G services. Its diversified revenue streams, including investments in health technology and artificial intelligence (AI)-driven customer service solutions, provide long-term growth potential.
At writing, Telus has a market capitalization of $22.53 billion, trading in a stable range despite broader market fluctuations. The defensive stock is also known for its generous dividend payouts, making it attractive for income investors. With a history of consistent dividend increases, Telus remains a solid choice for defensive portfolios.
Intact Financial
Intact Financial is Canada’s largest provider of property and casualty insurance. Insurance is a necessity, not a luxury, which means Intact benefits from steady demand. Whether it’s home, auto, or business insurance, Canadians rely on these policies for financial protection, even during economic downturns.
In its latest earnings report for the fourth quarter of 2024, Intact reported a book value per share of $92.67, marking a 13% increase year over year. This growth highlights its ability to generate consistent earnings while managing risk effectively.
As of writing, Intact’s stock price sits at $280.64, with a 52-week range of $216.62 to $294.35. The defensive stock has a market capitalization of $50.61 billion and has delivered strong financial performance despite economic challenges. Intact has a strong history of returning value to shareholders through dividends and strategic acquisitions, reinforcing its defensive appeal.
Bottom line
Why consider these stocks now? With economic uncertainty still present, defensive stocks provide much-needed stability. Hydro One ensures the lights stay on, Telus keeps people connected, and Intact protects financial assets. These defensive stocks aren’t flashy but deliver consistent earnings, making them ideal for market corrections.
The market is unpredictable, but defensive stocks like these can help smooth the ride. Whether the next correction is around the corner or further down the road, having resilient stocks in your portfolio can provide peace of mind. Hydro One, Telus, and Intact Financial stand out as strong candidates to weather any storm, making now a great time to consider adding it before the next drop.
