3 Canadian Defensive Stocks to Buy for Long-Term Stability

After a huge run up in 2025 and 2026, Canadian stocks could be due for a correction. Here are three defensive stocks to hold through any pullback.

| More on:
Key Points
  • The TSX surged about 50% over the past two years, so a correction in 2026 is possible—having defensive holdings can stabilize your portfolio.
  • Defensive picks: Waste Connections (resilient waste services), Loblaw (essential grocery/payoffs), and Fortis (regulated utility with a long dividend track record).
  • Looking for other top stocks for 2026. Check out these five expert stock picks now.

The Canadian stock market has been extremely exuberant over the past two years. The S&P/TSX Composite Index soared 30% in 2025 and 20% in 2025 for a +50% total gain in that time.

Muscles Drawn On Black board

Source: Getty Images

With such big returns, Canadian stocks could be due for a correction

While further good returns are possible in 2026, they are not likely to come without some volatility. Markets could be due for a decent correction at some point in 2026. It never hurts to own a few defensive stocks for this inevitable situation.

Defensive stocks can help stabilize your broader portfolio when the market dips or declines. They may not provide the highest returns in the long term. However, they can provide stable ballast when the market does fluctuate.

If you wanted a few of these stocks in your portfolio, three Canadian stocks worth owning are Waste Connections (TSX: WCN), Loblaw Companies (TSX: L), and Fortis (TSX: FTS).

Waste Connections: Resilience from waste

With a market cap of $59 billion, Waste Connections is the third-largest waste provider in North America. Cities generate tons of waste (literally). Waste removal and disposal is as essential as power, gas, and water utilities.

Waste Connections focuses on secondary and niche markets where it has competitive advantages and pricing power. Landfills are incredibly hard to build/permit. Once it owns these assets, it can be entrenched in a market for decades.

It has grown revenues and earnings before interest, tax, depreciation, and amortization (EBITDA) by 11% and 13%, respectively, at a compounded annual growth rate (CAGR) over the past five years.

Waste Connections stock only yields 0.85%. However, for 15 consecutive years, it has raised its dividend by a double-digit rate. For a resilient business, a growing dividend, and a recently attractive valuation, this is a good Canadian stock to own for defence today.

Loblaw: A top Canadian grocery stock

With a market cap of $73 billion, Loblaw Companies operates some of Canada’s largest grocery and pharmacy outlets. Not many things are more essential than groceries and home necessities.

Loblaws offers groceries across the premium and value spectrum. Given a more challenging economy, it has put a growth focus on expanding its value franchises. With a very strong rewards program, consumers tend to be loyal and recurring.

Loblaw has economies of scale and strong pricing power given its size. This has enabled it to steadily grow margins in recent years. This Canadian stock yields 0.89% today. Its dividend has increased by an 8% CAGR over the past 10 years.

Fortis: The safest utility for dividends

When it comes to dividends, Fortis is the GOAT (greatest of all time) in Canada. It has raised its annual dividend for 52 consecutive years! This Canadian stock yields 3.5% today.

This is the stock to hold when the market fluctuates. It has a low beta, which means its returns are not highly correlated to the broader stock market.

This is because of its resilient, steady-as-it-goes business model. Fortis operates nine regulated utilities across North America. These utilities are mainly transmission and distribution assets.

The focus on regulated utilities may limit Fortis’s upside, but it also caps its downside. Despite that, it still has some decent growth prospects. Management believes its rate base could grow by as much as 7% per year for the coming five years. It foresees its dividend growing by a 4-6% annual rate in the years ahead. Its solid bet for defensive income and growth in the years to come.

Fool contributor Robin Brown has no position in any of the stocks mentioned. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Child measures his height on wall. He is growing taller.
Dividend Stocks

New to Investing? Start With This Canadian Dividend Stock

This Canadian stock has a proven record of paying dividends and consistently raising their payouts in the years ahead.

Read more »

ETFs can contain investments such as stocks
Dividend Stocks

VFV Isn’t a Complete Portfolio: Here’s What Canadian Investors May Be Missing

VFV feels like a complete portfolio, but it’s really a concentrated bet on U.S. large caps and the U.S. dollar.

Read more »

Partially complete jigsaw puzzle with scattered missing pieces
Dividend Stocks

Don’t Want to Wait a Year for a GIC Payout? This 11.7% Dividend Stock Pays You Monthly

Hamilton Canadian Financials Yield Maximizer ETF (TSX:HMAX) stands out as the ultimate passive-income booster, but it's far different than GICs.

Read more »

dividends grow over time
Dividend Stocks

GIC or Dividend Stock? Here’s Where I’d Put $10,000 for Income and Growth

Rogers can beat a one‑year GIC on income and long-term upside, but only if you can handle volatility and debt…

Read more »

Agricultural harvesting at the last light of day, aerial view.
Dividend Stocks

Potash Power Play: Why This Overlooked Commodity Could Be Canada’s Trump Card

Canada’s potash dominance gives Nutrien a strategic edge as trade tensions rise, making this overlooked commodity worth watching closely.

Read more »

gold prices rise and fall
Dividend Stocks

Trade War 2.0: The TSX Stocks That Could Actually Benefit From U.S. Tariffs

These two TSX stocks could give investors great ways to benefit from Trade War 2.0.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

A 6% Yield Won’t Save a Weak Dividend: I’d Buy This Growing Payout Instead

A lower 3.3% yield can beat a 6% yield over time if the dividend keeps growing, and Manulife is showing…

Read more »

infrastructure like highways enables economic growth
Dividend Stocks

A $7,000 TFSA Contribution Could Become $70,000: Here’s the Math

A single $7,000 TFSA contribution can grow into $70,000 over decades if you pair time with a durable grower like…

Read more »