With markets (and valuations) near all-time highs, it might not be a bad idea to take a more defensive approach. Dividend stocks are great to hold if you expect the market to decline.
Firstly, many dividend stocks have defensive business models that earn stable income streams. Secondly, if the market does collapse, the right stocks will continue to pay out dividends and mitigate any of your capital losses.
Dividend stocks can act like ballast for your portfolio. The market storm hits, but your income returns keep flowing in. The best part is these types of stocks tend to act counter cyclically to the market. They underperform in bull markets, but they tend to outperform in bears.
If you only have a few hundred dollars to spend, here are three dividend stocks I’d look to buy for possible market turmoil to come.
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A diversified infrastructure stock
AltaGas (TSX:ALA) offers investors a mix of growth and a nice stream of income. The energy infrastructure company has been an incredible success story in the past few years. Its stock is up 131% in the past five years.
This dividend stock has orchestrated an excellent turnaround whereby it divested non-core assets, reduced debt, and focused its portfolio on resilient utilities and gas infrastructure. In the past five years, revenues have grown by a 19% compounded annual growth rate (CAGR), and earnings per share have risen by a 12% CAGR.
This company has an intriguing mix of assets. Investors get to own a very attractive gas utility that operates in the U.S. AltaGas continues to see high single-digit rate growth from that business for several years ahead. They also own a strong midstream business that will continue to grow from rising demand for energy export infrastructure in Western Canada.
AltaGas has a nice 3.1% dividend yield. That dividend has risen by a 5% annual compounded rate for the past five years. This dividend stock targets mid-single-digit dividend growth for the foreseeable future.
A stable utility stock for dividends
Fortis (TSX:FTS) is one of Canada’s most stable and reliable dividend stocks. The utility holding company has grown its dividend for 51 consecutive years. Its incredible consistency comes from its 10 regulated transmission and distribution utilities spread around North America.
It fosters the network that gets power and gas from production to end users. While demand does fluctuate, it largely operates in a narrow range over time.
Fortis projects 6% annual rate base growth over the coming few years. That should translate into 4–6% earnings and dividend per share growth in that time. While it is not seismic growth, it is consistent and the type of stock to hold in volatile environments. This dividend stock yields 3.6% today.
A leading pipeline and midstream stock for dividends
Pembina Pipeline (TSX:PPL) has underperformed pipeline peers in 2025. However, that presents opportunity because its stock is trading at its cheapest valuation in almost 10 years. It trades with a price-to-earnings ratio of 17, which is below both its major peers and its long-term average.
Yet, Pembina has a resilient business with over 85% of its income coming from long-term contracts. Its infrastructure is crucial to the Canadian energy industry. Energy production is expected to continue to rise in Western Canada and that is a long-term tailwind.
Pembina has a growing pipeline of capital opportunities that should yield growth in 2026 and beyond. This dividend stock yields 5.5% right now.
