The incredible momentum behind the TSX Index might carry over into the new year, but that doesn’t mean investors should chase stocks that have been the hottest of the hot of late.
Undoubtedly, despite the historic past-year run for the TSX Index and the promise of more great things to come, there remains ample value out there, especially in the corners of the market that are in free-fall. Indeed, not every Canadian stock has been firing on all cylinders, and for the investors seeking to take some risk off the table for 2026, the following dividend payers, I believe, are priced with a greater degree of safety in mind.
Of course, no stock is immune from a swift pullback, but if you’ve got a lower expectations bar and even lower valuation metrics (especially relative to historical averages), you might have a relative safety stock that can help bring better balance to your TFSA (Tax-Free Savings Account) or non-registered portfolio.
Though there’s no telling what’s in store for the TSX Index or the S&P 500 in the new year, I think that one should expect the market waters to get just a tad more volatile. Whenever expectations and valuations rise, things can get that much wobblier. In any case, let’s get right into the lower-risk (potential safety play) stocks that seem to be a smart buy at today’s valuations.
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Fortis
Shares of Fortis (TSX: FTS) are poised to end the year up just shy of 19%. That’s an incredible gain for a low-volatility utility with one of the most predictable growth profiles and dividend growth rates out there. And while the gain has come up short of beating the TSX Index, I still think the steady dividend payer is worth picking up, especially with shares slipping close to 4% from recent highs to $70 and change.
Undoubtedly, the technical picture isn’t looking as enticing as the rest of the market going into 2026, but if you’re in the market for a predictable dividend payer, I think it might be a good time to start doing some buying. The stock trades at 19.6 times forward price to earnings (P/E), a fair price to pay for relative stability in a year that may have a high chance of increased turbulence.
Even if a 10% correction were to hit at some point over the next 12 months, I think investors would be sitting comfortably in the name, given its low (0.40) beta, which entails a pretty low correction to the rest of the market.
Canadian Natural Resources
Canadian Natural Resources (TSX: CNQ) is another low-cost blue chip that might be worth picking up right here. The TSX Index might be red-hot, but shares of CNQ have sat out the big past year of gains, rising 0% on the year.
Shares have been pretty flat for close to four years now, but with a bountiful 5.2% dividend yield and plenty of room for expansion in the new year, I like the chances of further earnings surprises and the potential for a powerful breakout after yet another year of consolidating.
Finally, the $94 billion energy titan looks way too cheap at 14.2 times trailing P/E, making it one of the more affordable large-cap dividend payers with a yield north of 5%.
