In the middle of a booming bull market, made that much more exciting by one of the fourth industrial revolution (or AI boom) whose benefits might spread more broadly across the economy, questions linger as to whether it still makes sense to forego a bit of return by taking a step back and going for one of the defensive dividend stocks out there, the kind that tend to hold their own rather well when the lights begin to dim on the great market rally.
Indeed, timing the market by dumping growth stocks for defensive dividend payers with lower betas might not be the move to go for, especially if you’re just going to feel defeated if the rally moves on, perhaps led by growth and AI stocks, and you’re left hanging onto low-beta names that aren’t moving nearly as much, if at all. With recent market action pointing to a potential “return of value” on Wall and Bay Street, it certainly feels like a September stumble in stocks could pave the way for a growth-to-value rotation.
Of course, there’s always a chance that value is dragged down, even when growth falls out of favour. But, for the most part, I think that investors should consider some of the Canadian dividend stocks that can do fairly decently in most kinds of market climates.
Whether the AI-led bull market in the U.S. continues on or the financial- and energy-driven bull run in Canada has what it takes to extend another year, I do think that investors should be ready for just about anything, especially as the stakes rise with some of the growth names (think the AI plays) that might either be wildly overvalued or scary cyclical (cheap-looking, but actually just as expensive as a name with a pie-in-the-sky kind of multiple).
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Alimentation Couche-Tard
In my view, I’d much rather be in a name like Alimentation Couche-Tard (TSX: ATD) after a nearly 13% drop. At just shy of $82 per share, the convenience retailer has pretty much given back all of the gains it enjoyed after a phenomenal June quarterly earnings report. Indeed, the more recent (first quarter) number wasn’t nearly as well-received, but I still think the convenience store industry consolidator has a growth engine that could keep humming, regardless of which direction the TSX Index or S&P 500 turns in the fourth quarter of 2026.
Consumer discretionary spending and fuel price fluctuations are bound to make for increased choppiness come earnings season. At the same time, though, the company’s structural moves (increased focus on fresh food) and synergy-seeking growth-by-acquisition strategy, I think, are worth getting behind, especially as the market turns against a company that I still find to be highly misunderstood.
Organic growth and the tasty opportunities to be had in food
As the firm expands its footprint organically as investors await the next big merger and acquisition (M&A) move, I think that Couche-Tard can bridge the gap between big-league deals as it looks to execute on a game plan that could really move the needle higher on growth and margins. Not to mention, new builds could supercharge returns on invested capital, especially as new technologies (think AI smart checkout) look to play a bigger role.
When you consider how much food means to loyal shoppers of rival convenience store chains in the U.S., like Wawa (for submarines), Sheetz (for customizable ready-to-order meals), Casey’s General Stores (for pizzas), or even the much-larger Buc-ee’s (it’s all about the brisket), it’s clear the opportunity to be had as Couche-Tard continues shifting gears from lower-margin fuel to high-margin eats.
The bottom line
If the market marches lower and valuations across the industry contract, Couche-Tard stands to get more from the M&A waters for less. And when markets march higher, and people fill up the baskets, the firm also stands to win, even though quarter-to-quarter action might be a bit confusing for some. Either way, it’s the long-term structural drivers that are the reason to stay in the 1.1%-yielding dividend grower.
