The ongoing Israel-Iran conflict has pushed oil and natural gas prices higher, rattling investors. Elevated energy costs could stoke inflationary pressures, potentially prompting central banks to delay or scale back interest rate cuts. In this uncertain environment, investors should be especially cautious when deploying capital through their Tax Free Savings Accounts (TFSAs), as a sharp decline in stock prices followed by a sale could not only erode capital but also permanently reduce valuable contribution room.
Against this backdrop, here are three high-quality stocks I believe are well-positioned to navigate current uncertainty.
Source: Official White House photo by Daniel Torok
Dollarama
Dollarama (TSX:DOL) is a leading discount retailer operating 1,684 stores across Canada and 401 stores in Australia. The company has built a strong competitive advantage through its direct-sourcing business model, which eliminates intermediaries and enhances its bargaining power with suppliers. Combined with efficient logistics, this approach helps keep costs low and enables Dollarama to offer a broad range of everyday products at compelling price points. As a result, the retailer continues to generate solid same-store sales growth, even in challenging macroeconomic environments.
Looking ahead, the Montreal-based company plans to expand its Canadian store network to 2,200 locations by the end of fiscal 2034, while growing its Australian footprint to 700 stores. In addition, Dollarama holds a 60.1% stake in Dollarcity, which currently operates 684 stores across five Latin American countries. Dollarcity aims to increase its store count to 1,050 by the end of fiscal 2031, and Dollarama retains the option to raise its ownership stake to 70% by the end of next year.
Supported by these multiple growth avenues and resilient business model, I expect Dollarama to continue delivering steady financial performance regardless of broader economic conditions, which should, in turn, support long-term stock price appreciation.
Fortis
Another defensive stock that appears well-suited for a TFSA is Fortis (TSX:FTS), which operates nine regulated electric and natural gas utilities across the United States, Canada, and the Caribbean. With 100% of its assets regulated and approximately 95% focused on low-risk transmission and distribution operations, its earnings are relatively insulated from economic cycles and broader market volatility.
Backed by its stable and predictable financial performance, Fortis has generated an average annual total shareholder return of 10.4% over the past two decades. The company has also raised its dividend for 52 consecutive years and currently offers a solid yield of 3.3%, underscoring its commitment to returning capital to shareholders.
Looking ahead, Fortis plans to invest $28.8 billion over the next five years, which could grow its rate base at a compound annual rate of 7%. Coupled with ongoing operational and cost-efficiency initiatives, this expansion should support steady earnings growth. Reflecting this outlook, management expects to raise the dividend by 4–6% annually through 2030, positioning Fortis as a compelling buy in this uncertain outlook.
Hydro One
My final pick is Hydro One (TSX:H), a pure-play electricity transmission and distribution company with no meaningful exposure to commodity price fluctuations. Approximately 99% of its operations are rate-regulated, which helps shield its financial results from market volatility and ensures stable, predictable cash flows. Since 2018, the company has grown its rate base at an annualized rate of 5.2%, and this steady expansion, combined with its regulated business model, has supported solid financial and share price performance.
Over the past five years, Hydro One has delivered total shareholder returns of about 152%, representing an annualized gain of 20.4%.
Looking ahead, the company is progressing with its $11.8 billion capital investment plan, which could expand its rate base to $32.1 billion by the end of 2027, implying an annualized growth rate of roughly 7%. Amid these expansions, the company’s management anticipates 6–8% of annual EPS (earnings per share) growth through 2027, while also targeting annual dividend growth of approximately 6%. Given its resilient, regulated operations and clear growth visibility, Hydro One stands out as a strong, defensive addition to a TFSA portfolio.
