While maintaining the policy interest rate decision at 2.25% on Wednesday, the Bank of Canada (BoC) noted the economy remains in excess supply, “even with some rebound” expected for the second quarter of 2026. While it’s still possible that Canada may dodge a recession, again, economic uncertainty persists as U.S. authorities resume tariff “attacks” and an inflationary Iran war persists. For long-term investors, the best offence during a potential economic downturn is a bulletproof defence. On the Toronto Stock Exchange, a true defence means one thing: investing in reliable, cash-generating dividend stocks.
If you are looking to fortify your portfolio today, here are three TSX dividend stocks built to withstand the toughest economic storms.
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Fortis: The ultimate defensive dividend stock to hold through recessions
If there were a hall of fame for defensive Canadian dividend stocks to buy for recession-proof passive income, Fortis Inc. (TSX:FTS) stock would sit right at the entrance. Fortis is a regulated electric and gas utility giant serving millions of customers across North America. The beauty of the TSX utility stock’s business model is beautifully simple: no matter how tight consumer budgets get, people still prioritize heating their homes and keeping the lights on.
Strong and predictable demand has allowed Fortis stock to achieve something historic: 52 consecutive years of annual dividend increases. It’s the second longest dividend growth streaks in Canadian dividend stock history. FTS can comfortably raise its quarterly dividends through high inflation, soaring interest rates, and multiple global recessions.
While sustained capital appreciation has nudged Fortis stock’s current dividend yield down to 3.3%, the electric utility remains the quintessential defensive stock to buy and hold for long-term passive income.
Investors prioritizing absolute capital preservation and steady, compounding income growth may consider FTS stock as close to an all-weather core-portfolio anchor.
Enbridge stock: An energy infrastructure tollbooth, a diversified cash flow behemoth
Energy infrastructure titan Enbridge (TSX:ENB) stock operates an unparalleled network of liquids and natural gas pipelines, moving a massive chunk of the crude oil and natural gas consumed across North America. It’s a giant tollbooth, collecting steady fees based on the volume of energy passing through its pipes. Cash flows from new gas utility businesses and a growing renewable energy contracts portfolio means Enbridge has morphed into a diversified blue-chip dividend stock with strong economic moats, sticky customer demand, and a stellar balance sheet that survives economic downturns.
With roughly 98% of its earnings tied to long-term contracts or highly regulated frameworks, Enbridge’s cash flow is heavily insulated from erratic swings in oil and gas prices. This financial stability has enabled management to raise dividends for 30 consecutive years now, even during past recessions.
Following recent strong stock price performance, Enbridge stock’s dividend has reduced to under 5% annually. Backed by a massive, $40 billion secured growth capital investment program that targets growing distributable cash flow per share by 5% annually, Enbridge has plenty of operational visibility to keep funding its steady dividend increases well into the future, making it an elite investment candidate for defensive income portfolios.
Polaris Renewable Energy: The high-yield growth wildcard
Canadian investors who wish to juice up their defensive portfolios with a bit more yield and geographic diversification may check out Polaris Renewable Energy (TSX:PIF) stock right now. Polaris Renewable Energy operates a diversified portfolio of geothermal, hydro, solar, and wind projects across Latin America. Much like domestic utilities, its revenues and cash flows are anchored by long-term Power Purchase Agreements (PPAs), providing excellent operational cash flow predictability.
Polaris Renewable Energy stock recently gave income investors a major reason to cheer. The utility stock experienced a massive 12.4% surge on Tuesday following an exciting announcement that Mexico selected three of the company’s major solar and battery storage projects under a highly competitive national development program. PPAs on such projects may stretch for 25 years.
Even after a recent double-digit share price surge, PIF stock’s quarterly dividend still yields a respectable 5.5% annually, paid in more stable United States dollars. While its emerging-market footprint introduces slightly more macro volatility than domestic utilities, the long-term contract structures and a massive new expansion runway in Mexico make it an incredibly compelling, high-yield small holding to turbocharge your recession-resistant passive income stream.
