Canadian investors may be more concerned about getting on the defensive rather than the offensive right now. The market has been volatile for a while, and even all-time highs don’t seem to put investors at ease, which is why defensive stocks like insurance giants can be a great place to hide out.
Today, let’s look at what makes insurance giants so great, and one insurance stock to consider on the TSX today.
Source: Getty Images
Why insurance works
Canadian insurance giants are a strong way to build a defensive portfolio for a number of reasons. These combine resilience, reliable dividends, and global growth while also operating in a regulated and stable industry. In fact, the business model is defensive in itself. Because insurance companies generate steady income on a recurring basis through premiums, these come in even during recessions.
Furthermore, growth is part of this as well. Canadian insurance stocks also have massive investment portfolios, and this brings in diversified income to create less volatile earnings. These points also support a dividend that doesn’t just get paid out, but increases. For investors wanting steady income during these periods of volatility, an insurance stock can be a lifesaver.
And finally, there’s more to come from insurance stocks. Most are on a global scale, and Asia is becoming a very interesting area of growth. Insurance stocks continue to seek out fast-growing markets while also maintaining a stable base in Canada. Put together, these stocks provide a stable mix during downturns, but iA Financial (TSX: IAG) could be your best bet.
Why IAG?
IAG is one of the top Canadian insurance stocks investors can consider right now, and recent earnings show you why. Core earnings per share (EPS) grew 27% in the second quarter of 2025, with total EPS jumping 62% year over year! Furthermore, assets under management and administration climbed 16% to $274 billion. This showed the company managed to execute well in both Canada and the U.S.
Its trailing return on equity of 17% underscored that profitability wasn’t just growing, but well above the average for insurance stocks like IAG. And that means investors can therefore grab onto long-term growth rather than short-term gains. That growth also included a planned acquisition of RF Capital. This expands its wealth distribution platform, diversifying it beyond insurance and into wealth management. And as we see with banks and other insurance companies, this is an incredibly lucrative area.
Then there’s the dividend. IAG currently offers a dividend that just increased 10% to $0.99 per share! This shows the company continues to be confident in its cash flow and strength, and willing to put more cash in the hands of shareholders. Yet with a forward price-to-earnings (P/E) ratio over 11, the insurance stock is still attractively valued. Right now, a $7,000 investment could bring in $178 each year in dividend income!
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| IAG | $155.31 | 45 | $3.96 | $178 | Quarterly | $6,989 |
Bottom line
When it comes to security, dividend stocks in the insurance sector are some of the best you can buy. There’s income coming in regularly, yet also the defensive qualities from a regulated and growing industry. With strong earnings pouring in, healthy dividend growth, and a solid balance sheet, IAG continues to look like a top option.
