The Toronto Stock Exchange had an impressive run in 2025, even handily outperforming major U.S. indexes. As of January 16, 2026, the TSX is up 4.2% year-to-date. However, despite a hot start, many analysts advise caution.
In addition to trade uncertainty, geopolitical risks have heightened. The Trump administration initiated a tariff war last year and heightened geopolitical risks in 2026 following a military intervention in Venezuela.
Given these headwinds and market outlook, prioritizing stable income over capital appreciation is a sound strategy against potential volatility. For passive income generation and defensive positioning, two Canadian dividend giants are key buys for 2026.
More than a giant
Fortis (TSX:FTS) is a dividend giant, but not because of a high dividend yield. Instead, the term “giant” equates with “king.” This top-tier utility wears a crown because of its rock-solid reliability. FTS has raised dividends for 52 consecutive years. If you invest today, the share price is $72.28, while the dividend offer is 3.5%.
An enticing aspect of Fortis is its sustainable, regulated growth strategy. The $36.5 billion electric and gas utility company announced in late 2025 a $28.8 billion capital plan for 2026–2030 focused on transmission and distribution investments. This new five-year plan also supports a robust 7% rate base growth from $41.9 billion in 2025 to $57.9 billion by year-end 2030.
The appeal to income-focused investors is the growing payout. Its regulated growth strategy includes a dividend growth guidance of 4% to 6% through 2030. David Hutchens, President and CEO of Fortis, said, “We remain focused on low-risk, regulated utility growth, and our recent decisions to sell assets further support our funding plan and strengthen the balance sheet.”
Fortis assures that the five-year capital plan is low-risk and highly executable. Only 21% are related to major capital projects, and are to be funded primarily by cash from operations plus regulated debt.
The diversified regulated utility businesses with long-term contracts deliver recurring cash flows and dividends. That is why Fortis had for years maintained strong liquidity and enhanced shareholder value, notwithstanding substantial capital requirements.
Turnaround play
BCE (TSX:BCE), Canada’s most dominant telco, has improved its risk profile following a 56% dividend cut in May 2025. The decision ensures sustainable payouts moving forward. BCE trades at $33.59 per share and pays a 5.2% dividend. The payout ratio is down to 43.1%, indicating ample room for dividend growth.
The $31.3 billion communications company was under pressure from intense price competition, as well as macroeconomic and geopolitical instability. Mirko Bibic, CEO of BCE, said resetting the dividend was the most responsible way to address BCE’s capital allocation strategy. “Essentially, the new dividend level allows us to de-lever and invest for growth,” he added.
In Q3 2025, operating revenues and free cash flow increased 1.3% and 20.6% year-over-year to $6 billion and $1 billion. Notably, net earnings reached $4.5 billion compared to the $1.2 billion net loss in Q3 2024. Bibic is confident that the three-year strategic plan, along with a disciplined capital allocation strategy, will drive growth in a reshaped operating environment.
Income generation
Canada’s equities might miss a three-peat of double-digit growth in 2026. Nonetheless, investors are safer focusing on income generation by taking positions in dividend giants like Fortis and BCE.
