3 Canadian Defensive Stocks to Buy for Long-Term Stability

The Canadian stock market has been extremely exuberant over the past two years. The S&P/TSX Composite Index soared 30% in 2025 and 20% in 2025 for a +50% total gain in that time.

With such big returns, Canadian stocks could be due for a correction

While further good returns are possible in 2026, they are not likely to come without some volatility. Markets could be due for a decent correction at some point in 2026. It never hurts to own a few defensive stocks for this inevitable situation.

Defensive stocks can help stabilize your broader portfolio when the market dips or declines. They may not provide the highest returns in the long term. However, they can provide stable ballast when the market does fluctuate.

If you wanted a few of these stocks in your portfolio, three Canadian stocks worth owning are Waste Connections (TSX:WCN), Loblaw Companies (TSX:L), and Fortis (TSX:FTS).

Waste Connections: Resilience from waste

With a market cap of $59 billion, Waste Connections is the third-largest waste provider in North America. Cities generate tons of waste (literally). Waste removal and disposal is as essential as power, gas, and water utilities.

Waste Connections focuses on secondary and niche markets where it has competitive advantages and pricing power. Landfills are incredibly hard to build/permit. Once it owns these assets, it can be entrenched in a market for decades.

It has grown revenues and earnings before interest, tax, depreciation, and amortization (EBITDA) by 11% and 13%, respectively, at a compounded annual growth rate (CAGR) over the past five years.

Waste Connections stock only yields 0.85%. However, for 15 consecutive years, it has raised its dividend by a double-digit rate. For a resilient business, a growing dividend, and a recently attractive valuation, this is a good Canadian stock to own for defence today.

Loblaw: A top Canadian grocery stock

With a market cap of $73 billion, Loblaw Companies operates some of Canada’s largest grocery and pharmacy outlets. Not many things are more essential than groceries and home necessities.

Loblaws offers groceries across the premium and value spectrum. Given a more challenging economy, it has put a growth focus on expanding its value franchises. With a very strong rewards program, consumers tend to be loyal and recurring.

Loblaw has economies of scale and strong pricing power given its size. This has enabled it to steadily grow margins in recent years. This Canadian stock yields 0.89% today. Its dividend has increased by an 8% CAGR over the past 10 years.

Fortis: The safest utility for dividends

When it comes to dividends, Fortis is the GOAT (greatest of all time) in Canada. It has raised its annual dividend for 52 consecutive years! This Canadian stock yields 3.5% today.

This is the stock to hold when the market fluctuates. It has a low beta, which means its returns are not highly correlated to the broader stock market.

This is because of its resilient, steady-as-it-goes business model. Fortis operates nine regulated utilities across North America. These utilities are mainly transmission and distribution assets.

The focus on regulated utilities may limit Fortis’s upside, but it also caps its downside. Despite that, it still has some decent growth prospects. Management believes its rate base could grow by as much as 7% per year for the coming five years. It foresees its dividend growing by a 4-6% annual rate in the years ahead. Its solid bet for defensive income and growth in the years to come.

The post 3 Canadian Defensive Stocks to Buy for Long-Term Stability appeared first on The Motley Fool Canada.

Should you invest $1,000 in Fortis Inc. right now?

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* Returns as of January 5th, 2026

More reading

• 5 Canadian Dividend Stocks Everyone Should Own
• 3 TSX Stocks Soaring Higher With No Signs of Slowing
• 3 Defensive Stocks That Could Thrive During Economic Uncertainty
• 3 Dividend Stocks to Help You Achieve Financial Freedom
• Passive Income: How to Earn Safe Dividends With Just $20,000

Fool contributor Robin Brown has no position in any of the stocks mentioned. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.