2 Defensive Canadian Stocks I’d Buy as Recession Fears Rise

Recession fears can make investors do strange things. Some sell everything, some chase the highest yield they can find. The better move may sit somewhere in the middle. Investors can look for companies tied to services and products people keep using, even when the economy slows. BCE (TSX:BCE) and Premium Brands Holdings (TSX:PBH) both fit that defensive idea, though in very different ways.

BCE

BCE stock remains one of Canada’s biggest telecom names. It owns Bell, provides wireless, internet, television, media, and business services, and now has more U.S. fibre exposure after its Ziply Fiber acquisition. Telecom isn’t immune to recessions. Customers can delay phone upgrades or shop harder for deals. But the internet and wireless service sit close to household essentials now. Most people cut elsewhere before they cut connectivity.

That makes BCE stock relevant as recession fears rise. In the first quarter of 2026, BCE’s operating revenue grew 4% to $6.17 billion. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 2.9% to $2.63 billion, and free cash flow edged up 0.8% to $804 million. Those aren’t explosive numbers, but defensive investors don’t need explosive. They need durable cash flow.

The dividend also looks less scary after last year’s painful reset. BCE stock’s payout cut hurt income investors, but it also made the dividend more manageable. It recently showed a trailing annual dividend yield near 5%. That’s still a strong payout for a company with national scale. The risk, of course, is debt, competition, and the cost of building fibre and artificial intelligence (AI)-related infrastructure. BCE stock needs to show that its U.S. fibre move and cost controls can translate into better long-term growth.

PBH

Premium Brands brings a different kind of defence. The company makes, markets, and distributes specialty food products across Canada and the United States. It owns a large mix of businesses tied to sandwiches, protein products, seafood, baked goods, meats, and prepared foods. As with BCE stock, demand doesn’t disappear in a recession. Consumers may trade down, but grocery, quick-service, and prepared-food channels can still hold up better than big-ticket discretionary spending.

The latest quarter showed real momentum. Premium Brands reported record first-quarter revenue of $2.1 billion, up 24.6% from last year. Adjusted EBITDA from continuing operations rose 26.7% to $171.2 million. Adjusted earnings per share (EPS) climbed 18.6% to $0.83. Management also maintained 2026 guidance for revenue between $9.25 billion and $9.55 billion, with adjusted EBITDA between $870 million and $910 million.

That outlook gives PBH an interesting mix of defence and growth. It’s not just sitting still and collecting food sales. It pushed into the United States, expanded production, and completed acquisitions, including Stampede Culinary Partners. It also sold its stake in Shaw Bakers after quarter-end, which helped bring pro forma total debt to EBITDA down to 3.9 times, alleviating some investor concern.

The dividend adds appeal. Premium Brands declared a second-quarter dividend of $0.85 per share, or $3.40 annualized. Recent dividend data showed a yield around 3.7%. That’s lower than BCE’s, but PBH offers more obvious growth potential if margins improve and its U.S. expansion pays off.

Foolish takeaway

The risks still deserve space. Premium Brands faces food inflation, labour costs, acquisition integration risk, and debt. If consumers pull back or large customers delay launches, growth can wobble. BCE stock faces regulatory pressure, price competition, and heavy capital needs. Neither stock offers perfect safety.

Still, these two names make sense together. BCE stock offers essential connectivity and a higher yield. Premium Brands offers recession-resistant food exposure with a stronger growth profile. For TFSA or long-term income investors worried about a slowdown, that balance looks useful. Especially with $7,000 in each stock for dividends to reinvest.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTBCE$34.62202$1.75$353.50Quarterly$6,993.24PBH$90.5877$3.40$261.80Quarterly$6,974.66

Recession fears don’t mean investors need to hide in cash. They can own businesses built around everyday needs, collect dividends, and let time do its work. BCE stock and Premium Brands look like two defensive Canadian stocks I’d buy before the next wave of market worry arrives right now.

The post 2 Defensive Canadian Stocks I’d Buy as Recession Fears Rise appeared first on The Motley Fool Canada.

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More reading

• Transform Your TFSA Into a Money-Making Machine With Just $10,000
• This Dividend Stock Has Fallen 55% — and I’d Still Back It as a Long-Term Hold
• BCE or Telus: Which TSX Dividend Stock Is a Better Buy Now?
• What’s the Deal With Telus’s Dividend?
• Why BCE’s Dividend Is in the Spotlight

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Premium Brands. The Motley Fool has a disclosure policy.