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.

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

person with spyglass looks at ocean horizon
Dividend Stocks

This 5.9% Dividend Stock Is One I’ll Never Sell — Here’s Why

This Canadian dividend stock has a great combination of a 5.8% dividend yield, resilient cash flow, and billions of dollars…

Read more »

concept of growth
Dividend Stocks

The Dividend Stock I’d Never Sell, Even in a Downturn

Fortis is a dividend stock I'd hold through a downturn. Its regulated utilities and dividend growth support a patient approach…

Read more »

frustrated shopper at grocery store
Dividend Stocks

2 Dividend Stocks Retirees Can Count on for Decades

These two Canadian dividend stocks offer a great mix of essential businesses, regular dividends, and long-term growth investments that could…

Read more »

customer comparison shops in liquor store
Dividend Stocks

How Much TFSA Income Triggers an OAS Clawback?

The OAS clawback is based on net world income, with a 2025 minimum recovery threshold of $93,454, not on a…

Read more »

ETF is short for exchange traded fund, a popular investment choice for Canadians
Dividend Stocks

Create a Set-And-Forget Portfolio With Just 3 ETFs

Build a set-and-forget portfolio with VCN, XUU, and XEF, three ETFs offering broad exposure to Canadian, U.S., and international stocks.

Read more »

voice-recognition-talking-to-a-smartphone
Dividend Stocks

1 Canadian Dividend Stock Down 22% I’d Buy Right Now

The Canadian dividend stock has witnessed a notable pullback, creating a buying opportunity for investors looking for steady income.

Read more »

Colored pins on calendar showing a month
Dividend Stocks

How to Build a Canadian Portfolio That Pays You Monthly

If you like monthly income, this mix of five real estate, industrials, and energy stocks can pay you attractive monthly…

Read more »

Concept of rent, search, purchase real estate, REIT
Dividend Stocks

The Best Monthly-Paying Dividend Stock on the TSX Right Now

This monthly dividend stock offers an attractive mix of nearly 5% yield, monthly distributions, and a deeply discounted unit price…

Read more »