2026 has been one of the most volatile years in the stock market that I can remember. Since COVID-19, there have been plenty of ups and downs. But there have just been a plethora of factors to contemplate in 2026. It’s not easy knowing how to invest in this environment.
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Flock to steady TSX stocks when the market turns volatile
Fortunately, there are some faithful stocks that deliver solid, steady results year in and year out. When the market turns volatile, these stocks tend to outperform.
You might have to pay a premium to hold these stocks right now. However, if you just want steady returns and the ability to sleep well at night, these two defensive stocks are worth looking at today.
Loblaw: A quiet TSX star
With a market cap of $71.5 billion, Loblaw Companies (TSX:L) is the largest grocery and pharmacy provider in Canada. If food inflation is a concern, why not buy a company that could benefit from it?
It could help you offset the losses from inflation. Loblaw stock is up 250% in the past five years. With this stock, you would have beaten inflation and then significantly more!
While the company is only growing revenues by a mid-single-digit rate, earnings per share (EPS) have risen by a 23% compounded rate. Share buybacks have been a good part of this return. Since 2021, it has bought back around 3.5% of its shares every year.
Loblaw is a well-managed business. Its scale, pricing power, top loyalty program, and diversification across brands and regions differentiate it as an essential goods leader in Canada.
Today, its valuation is elevated. It trades with a price-to-earnings (P/E) ratio of 24, which is above its 10-year average of 17. It is arguably a much better business than 10 years ago. However, investors need to be cognizant that they aren’t likely to fetch additional gains from its valuation increasing further in the years ahead.
Waste Connection: A TSX stock that is down but not out
Waste Connections (TSX:WCN) is another defensive stock to hold through the volatility. It has a market cap of $56 billion. However, its recent performance has been less than spectacular. This TSX stock is down 9% this year.
Yet, garbage and waste removal are essential services for consumers and businesses. You only need to forget your garbage day once to realize how important waste disposal is.
Waste Connection has a long history of delivering solid shareholder value. Its stock has compounded at a 13.8% annual rate over the past 10 years. In the past five years, it has grown revenues by an 11.7% compounded annual rate, and EPS have risen by a 39% compounded annual rate. It has a history of making smart acquisitions and delivering steady organic growth.
An environmental issue at a landfill in California has been a costly drag on results in the past two years. Once that is sorted, this stock could return to its history of solid compounded growth. After the recent pullback, this stock is trading near its lowest P/E ratio in the past five years. The pullback could present a nice opportunity to add this low-volatility stock to your portfolio.
