April 2025 saw global stock markets enter a strange phase of declines when the newly reelected US President, Donald Trump, announced new tariffs. Trump did not spare any country from tariffs, including Canada and Mexico.
Among the targets for new tariffs was China which, in turn, applied tariffs on US goods as well. That followed a bit of back and forth, which also saw Trump suspend tariffs for 90 days across the board, except on China. As of this writing, the tariffs remain at a standstill, and the US-China trade tensions seem to be easing up. However, nobody knows how long that’ll last.
There is a high likelihood of things turning south. Since the announcement of tariff suspensions, the S&P/TSX Composite Index, the benchmark index for the Canadian stock market, has climbed by over 17%. However, many analysts still fear a recession.
If a recession does come to pass, it may be better to prepare and implement a defensive strategy. The goal should be to identify and invest in TSX stocks capable of weathering a potential recession and emerging stronger on the other side. Against this backdrop, the following two TSX stocks might be good picks to consider.
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Telecom giant
Telus Corp. (TSX:T) is one of the top telecom companies in Canada. The $33.5 billion market capitalization company, headquartered in Vancouver, is one of the Big Three telcos. It has around a third of the mobile phone subscriber market. Telus also has a wireline presence in the Quebec region. More recently, the company has started increasing its fibre optic footprint to upgrade its infrastructure and offer better value to customers.
In this day and age, everyone needs to be connected with the rest of the world. Telcos like Telus are and shall continue to be essential businesses. Telus fulfills an important need for its consumers with its wireline and wireless internet services. The company also has several subsidiaries operating in various sectors to diversify the its revenue streams.
As of this writing, Telus stock trades for $21.99 per share and boasts a juicy 7.6% dividend yield that you can lock into your portfolio today.
Utilities giant
Fortis Inc. (TSX:FTS) is undoubtedly my top pick when it comes to investing in utility companies. Utility businesses don’t offer much in terms of capital gains. Typically, utility stock prices are less affected by the rest of the market. As boring as that might be for growth-focused investors, it is this same defensive factor that makes them a good holding during market downturns.
Fortis is a $32.6 billion market cap utility holding company that owns and operates several electric and natural gas utility businesses across Canada, the US, and the Caribbean. It serves over 3.4 million customers, operating in highly rate-regulated markets. Most of its revenue comes from long-term contracted assets. All these factors mean it generates stable and predictable cash flows across market cycles. In turn, the company can use the proceeds to fund capital programs and increase shareholder dividends.
As of this writing, FTS stock trades for $64.93 per share and boasts a 3.8% dividend yield, accompanied by a 50-year dividend-growth streak.
Foolish Takeaway
Considering how stocks across the board seem to be appreciating in value right now, preparing for a recession might seem like you’re being overly cautious. However, it is always a good idea to hope for the best but prepare for the worst.
To this end, making defensive investments focusing on financial resilience and capital protection makes sense. Fortis stock and Telus stock are two blue-chip Canadian stocks that I feel will work well for this goal. The two industry-leading stocks offer the kind of cash flows and revenue supported by defensive business models that can make them excellent long-term holdings for your self-directed portfolio.
