In recent days, cracks have been forming in stock markets in North America. While indexes have performed quite well in 2025, even some of the largest stocks in the world have seen recent pullbacks.
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Markets look a bit frothy: Here’s why you should get defensive
Beyond massive investments in artificial intelligence and data infrastructure, the global economy has weakened. The re-emergence of SPACs (special purpose acquisition companies) and meme stocks is indicating that markets are reaching speculative peaks.
A combination of speculative activity, high valuations, and a weakening economic outlook could mean markets may be due for a pullback. Many highly valued tech stocks have already drastically declined.
If you are looking for some defensive stocks to hold through a market pullback, here are three I’m contemplating adding now.
Get defensive with this trash stock
With a market cap of $60 billion, Waste Connections (TSX:WCN) is the third-largest major waste provider in North America. Waste removal is a crucial and essential service. As populations rise, so should waste volumes.
It is a competitive industry, but Waste Connections tends to operate in secondary markets or regions where it can be the top provider. Once it has the landfills and the network, it is very hard for a new competitor to come and disrupt the market.
Over the past five years, Waste Connections has steadily compounded revenues and earnings per share by respective 11% and 25% annual rates. A mix of strong pricing power and thoughtful acquisitions has helped drive good results in the past several years.
Today, Waste Connections stock is down 5% for the year. Its stock is trading at a price-to-earnings ratio of 30. That is its lowest value since late 2023. The dip could be a nice opportunity to add the stock.
A top utility stock for steady growth
If you want to get very defensive, Fortis (TSX:FTS) is about the best you will find in Canada. With a market cap of $36 billion, it is one of the largest utility companies based in Canada.
Fortis is unique for its focus almost entirely on regulated utility operations. It owns transmission and distribution assets that are quintessential to the stable operations of the power grid across North America.
Fortis stock has a low beta. It doesn’t fluctuate much, and its returns are not correlated to the broader market. It just announced a new five-year capital plan.
Fortis will invest $28.8 billion over that time and expects to grow its rate base by a 7% compounded annual growth rate. Fortis just raised its dividend for the 52nd consecutive time. It expects to keep growing its dividend by 4-6% per annum for the coming five years. It yields 3.5% now.
A top Canadian seniors living player
Another stock to shelter from volatility is Chartwell Retirement Residences (TSX:CSH.UN). With a market cap of $5.95 billion, it is the largest pure-play retirement and independent living provider for seniors in Canada.
After the pandemic, which significantly impacted the sector, Chartwell’s stock has roared back. Its stock is up 157% in the past three years and 95% in the past five years.
Chartwell has done an excellent job of streamlining its portfolio, improving occupancy, and rightsizing its balance sheet. With the number of baby boomers starting to retire and age, there is substantial long-term demand for Chartwell’s units.
The company has delivered strong results in the past couple of years. It pays a 3% dividend yield. The stock trades at a substantial discount to American peers, so it could still see its multiple re-rate over time. All in all, it’s a defensive stock with some optional growth in the long term.
