Market volatility is part and parcel of investing. That’s what generates the above-average returns for investors relative to other asset classes like real estate and fixed income investing.
That said, when times get volatile, some investors want to hunker down in safer, more defensive names. Here are two top stocks I think can outperform in a period of severe market uncertainty. So, for those worried about the next downturn being around the corner, here are two names I think are worth considering to insulate a portfolio.
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Barrick Gold
A top global gold miner by volume, Barrick Gold (TSX: ABX) remains a top pick of mine for those seeking defensive exposure in the market right now.
Indeed, when markets get choppy, money often rotates into hard assets. And few proxies are as direct as a large, low‑cost gold producer with a fortress balance sheet.
Barrick just reported 2025 revenue of nearly $17 billion, driven by net earnings of nearly $5 billion, more than doubling the prior year’s profit as free cash flow nearly tripled. That kind of cash generation, backed by a $2 billion net cash position, gives management ample room to keep rewarding shareholders while funding high‑return projects through the cycle.
Importantly, Barrick isn’t a story stock. This is a company anchored by roughly 85 million ounces of proven and probable gold reserves plus growing copper exposure. I think that provides investors with the long‑duration leverage to metal prices they’re looking for, without stretching the balance sheet.
With gold’s traditional safe‑haven role back in focus amid fiscal strains and geopolitical tension, many experts believe Barrick Gold stock trades at a discount to fair value. I agree.
Royal Bank of Canada
On the other side of the barbell, Royal Bank of Canada (TSX: RY) provides the kind of earnings stability and dividend reliability that help investors sleep at night when indices are swinging triple digits.
For fiscal 2025, RBC delivered net income of more than $20 billion, up about 25% year over year. These returns were driven by a surge in diluted EPS, which rose at the same clip on strength across retail banking, capital markets, and wealth management. Return on equity sat in the high‑teens (impressive). And the company’s management team has now set a 17%‑plus ROE target for 2026, one of the best in the sector.
I think that as Royal Bank continues to benefit from its strategic focus on creating cost efficiencies, AI‑driven productivity, and synergy capture from the HSBC Canada acquisition, there’s a lot to like about this company’s upside. With a common equity tier 1 ratio of roughly 13.5%, investors can breathe easy knowing the company is comfortably above regulatory minimums.
This provides RBC with the flexibility to keep lending through a downturn rather than playing defence. Furthermore, RBC’s dividend looks well‑covered, with a payout ratio in the low‑40% range. So, for those seeking exposure to a long-term capital appreciation and dividend stock, this is a top idea in my books right now as a way to play defense.
