2 Stocks You May Want to Avoid at All Costs in 2026

The year 2026 has brought with it risks and uncertainties. It began with a war in Venezuela, which shook the entire world’s oil supply chain and commodities. Gold prices shot up, with gold stocks registering double-digit growth in the first 10 days of January trading. Governments worldwide are shifting their focus to building defence and looking for new trade partners. This could make it difficult for renewable energy companies that rely on government subsidies to grow.

Also, companies with high capital expenditure and significant debt could have a tough year. This may be a year for defensive investing rather than risky investing.

Two TSX stocks to avoid at all costs in 2026

Just out of the pandemic, Algonquin Power & Utilities’s (TSX:AQN) share price collapsed as the company, with its $7.7 billion in debt in 2022, was caught in the interest rate hike. AQN’s capital-intensive business of developing renewable energy projects could not handle the variable interest rate debt burden and also pay dividends. The end result was a  40% dividend cut in 2023 and a management change.

The new management’s three-point program involved selling the renewable energy business and its 42.2% stake in Atlantica Sustainable Infrastructure to reduce debt and strengthen its utility business. The offloading of assets helped it reduce debt to $6.4 billion in the third quarter of 2025. It has appointed new chief operating and finance officers to grow its utility business.

This whole restructuring has taken a toll on its dividend per share, which has been falling for the last three years.

Although 2026 is the year when the management will move from sustaining to thriving, its $6.3 billion debt and capital-intensive business make it a stock to avoid. Utility stocks are defensive plays when financial discipline is robust and management is stable.

Instead of Algonquin Power & Utilities, a better utility stock would be energy utility holding company Fortis, with a 3.6% dividend yield and a 25-year history of growing dividends.

Northland Power (TSX:NPI) is another renewable energy stock to avoid in 2026. It has strong exposure to European and Canadian wind and solar power projects. It has 3.5 gigawatts (GW) of projects operational in 2025, and around 2.2 GW under construction. The timely and in-budget execution of these projects is mandatory for Northland Power’s share price to grow.

The company has even slashed its dividends in 2026 to set aside capital to fund these projects. However, geopolitical tensions could pose a risk and lead to project delays. So far, the management has spotted no such risk, but it cannot be ruled out.

Northland Power is undergoing restructuring to unlock shareholder value and achieve $50 million in savings. It is centralizing its onshore, offshore, gas & utilities businesses and dividing them geographically in the Americas and internationally. The next three years could be slow for dividends until these projects come online and start generating cash flows.

Instead of Northland Power, you could consider investing in Tourmaline Oil, which is giving away special dividends as its natural gas reserves find a profitable market.  

Investor takeaway

Investing in stocks is equivalent to investing in businesses, and businesses have cycles that are influenced by macroeconomics, industry, regulations, policy decisions, consumer demand, and management’s actions. The market is ripe for commodities, minerals, and oil and gas. Renewable energy stocks depend heavily on government policies, and the race for petro dollar might make oil and gas a priority, landing you better returns there.

Therefore, consider taking profits from strong commodity, mineral, and oil and gas positions now. Then, be prepared to shift those gains into renewable stocks when the sector’s prospects improve, so you can capitalize on both market cycles.