It may be time to position your portfolio a little more defensively with some Canadian dividend stocks. Ever since April this year, stocks in Canada and the U.S. have been on a steady upward trajectory.
However, that trend could be due for a change. The economy is slowing, stock valuations are high, and the market appears a bit frothy. The stock market could be at risk for a correction in the next few months.
If you are looking for some more defensive dividend stocks to hold during a market correction, here are three dividend stocks to buy in October.
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Exchange Income: A diversified Canadian stock
Exchange Income Corporation (TSX: EIF) is an interesting Canadian stock for a mix of income and capital appreciation. While its business is largely focused on aviation and aerospace, it also operates several niche industrial businesses.
Niche would be a good descriptor for this company. It operates niche air services for remote northern regions. While these are challenging to operate, they have little to no competition and are essential to the communities they serve. It just acquired Canadian North airline, which makes it a dominant provider of air services to northern communities.
The company has been delivering very good results in 2025. Last quarter, it delivered record revenue and adjusted net earnings. It also increased its outlook projections by 5%.
Exchange Income pays a $0.22 per share monthly dividend. That equates to a 3.5% dividend yield. This Canadian stock has raised that dividend 17 times over the past 20 years, so investors are likely to see their yield on cost rise over time.
Pembina Pipeline: A Canadian infrastructure leader
Another Canadian dividend stock I would look to add today is Pembina Pipeline (TSX: PPL). While it is one of the largest pipeline and midstream players in Western Canada, this stock has underperformed other major pipeline peers in 2025.
It faced some uncertainty over the re-contracting of a major pipeline. While that has been resolved, it will have some near-term effects on profitability. However, looking forward, the company looks very well-positioned.
It is a major processor of natural gas. With electricity demand rising, natural gas continues to be an important fuel for electricity production. There are rumours Pembina is nearing completion to power a data centre complex in central Alberta.
It currently has one of only a few approved LNG terminals in construction. Demand for that throughput has been very high, even before it is built.
This Canadian stock has several catalysts for future growth. Though the market is not recognizing it. While you wait, you can earn a nice 5.3% dividend yield.
First Cap: A Canadian real estate stock
Another resilient Canadian dividend stock to hold in a downturn is First Capital REIT (TSX: FCR.UN). With a market cap of $4 billion and 21.9 million square feet of space, it is one of the largest grocery-anchored retail landlords in Canada.
Its properties are in excellent locations. Consequently, it has a high 97% occupancy and it has enjoyed mid-single digit rental rate growth for years. Right now, the company is working to maximize its assets, sell-off non-core assets, and improve its balance sheet. The REIT has made good progress this year.
This is significantly de-risking its portfolio. The REIT has an improving balance sheet and rising cash flows. It could start growing its monthly dividend soon. Right now, First Capital yields 4.6%. This Canadian stock also trades at a big discount to its private market value, so you collect a nice yield while you wait for the value to materialize.
