The Canadian equity markets have posted impressive gains this year, with the S&P/TSX Composite Index up 22.4%. However, challenges such as persistent inflation, the ongoing trade war, and geopolitical tensions continue to pose risks. So, if you’re cautious about the recent market rally, here are three resilient Canadian stocks that can add stability to your portfolio.
Hydro One
Hydro One (TSX:H) is a pure-play electricity transmission and distribution company serving around 1.5 million customers. With 99% of its operations fully rate-regulated and minimal exposure to commodity price fluctuations, the company’s financial performance remains largely insulated from economic cycles and market volatility. Backed by its stable and predictable earnings, the utility company’s stock has delivered a total return of 48.7% over the past five years. During the same period, it has raised its dividend at an annualized rate of 5.4% and currently offers a forward yield of 2.6%.
Moreover, electricity demand is increasing due to the electrification of the transportation sector and rapid expansion of power-intensive data centres driven by the growing adoption of artificial intelligence. Amid rising electricity demand, Hydro One plans to expand its asset base through a $11.8 billion capital investment program, which could increase its total assets to $32.1 billion by 2027. Supported by these investments, the company projects its adjusted EPS (earnings per share) to grow at an annual rate of 6% to 8% through 2027. Given its stable business model and predictable growth outlook, Hydro One appears to be an attractive defensive investment.
Waste Connections
My second pick is Waste Connections (TSX:WCN), which provides solid waste management services across the United States and Canada. By focusing primarily on secondary and exclusive markets, the company faces less competition, enabling it to maintain strong pricing power and enjoy higher profit margins. Additionally, it has expanded its footprint through organic growth and strategic acquisitions, thereby enhancing its financial performance and stock price. Over the last decade, WCN stock has delivered returns of over 500% at an annualized rate of 19.6%.
Moreover, WCN continues to expand its footprint through continued acquisitions. It has a solid acquisition pipeline of private companies that can generate around $5 billion of revenue. Along with these expansions, the company is focusing on adopting technological advancements, improving safety records, and enhancing employee engagement, which support its margin expansions in the coming years. Notably, the waste management company has raised its dividend in double digits for 14 consecutive years and currently offers a yield of 0.84%.
Enbridge
Enbridge (TSX:ENB) is another dependable Canadian stock I’m optimistic about, given its highly contracted midstream operations and low-risk utility businesses. The company also owns and operates 41 renewable energy assets with a total generation capacity of 7.2 gigawatts, selling the power generated from these facilities through long-term power purchase agreements. Additionally, the company has minimal exposure to commodity price fluctuations, with 80% of its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) indexed to inflation. This structure helps maintain its financial performance resilience against commodity price swings and economic cycles, thereby delivering stable and predictable financial results and cash flows.
Backed by its strong financial performance, Enbridge has delivered total returns of over 615%, representing an annualized growth rate of 10.3%. The company has also paid dividends consistently for the past 70 years and has increased its payout at an impressive annualized rate of 9% since 1995. Besides, the company is expanding its asset base through $9–$10 billion of annual capital investments to capitalize on growth opportunities across its business segments. Amid these expansions, the company’s management predicts that its adjusted EBITDA and EPS will grow in the mid-single digits in the coming years. Considering its consistent dividend growth, solid financials, and healthy growth prospects, I believe Enbridge will continue delivering healthy returns in the coming years.
