3 Canadian Stocks to Buy if the Recession Gets Worse

Recession worries are back. When the economy slows, investors often rush toward safety. That doesn’t mean hiding in cash forever. It means looking for businesses that sell essential services, low-cost products, or must-have information. These three all fit that screen in different ways. None can dodge a market sell-off completely, but each has a business model that could hold up better if consumers and companies start pulling back.

CU

Canadian Utilities (TSX:CU) proves that people still need power and natural gas in a recession. The company owns regulated utility assets tied to electricity, natural gas, and energy infrastructure. That gives it a steadier earnings base than many cyclical stocks. Customers may delay a new car or vacation, but they still heat homes and keep the lights on.

The latest results showed that steady profile. Canadian Utilities reported first-quarter adjusted earnings of $242 million, or $0.89 per share, up from $232 million, or $0.85 per share, last year. That wasn’t a blowout, sure, but recession-resistant stocks do not need fireworks. They need consistency.

The dividend adds to the appeal. Canadian Utilities pays $0.46 per share each quarter, or about $1.85 annually. It has raised its dividend for more than five decades, which makes it one of Canada’s most reliable dividend growers. The risk is that utilities can struggle when interest rates stay high. Large projects also need careful execution. Still, for defensive income, Canadian Utilities looks built for rougher weather.

DOL

Dollarama (TSX:DOL) could be the most obvious recession stock on the TSX, and for good reason. When shoppers feel squeezed, they search for value. Dollarama stock gives them low prices on food, household goods, party supplies, seasonal items, and everyday basics. That makes the company useful in both good and bad economies, but especially when budgets tighten.

The business continues to grow. Dollarama stock’s fourth-quarter fiscal 2026 sales climbed 11.7% to $2.1 billion. Comparable sales in Canada rose 1.5%, even after strong growth a year earlier. The company also raised its quarterly dividend, though the yield remains small.

The real attraction is not income, but resilience and growth. Dollarama stock keeps opening stores in Canada while expanding through Dollarcity in Latin America and The Reject Shop in Australia. That gives it more ways to grow if Canadian consumers slow down. The risk is valuation. Investors already know Dollarama stock is a high-quality business, so the stock often trades at a premium. A recession could help sales, but a pricey stock can still pull back.

TRI

Thomson Reuters (TSX:TRI) offers a different defensive angle. It sells information, software, and workflow tools to legal, tax, accounting, and corporate customers. These are not impulse purchases. Lawyers, accountants, and companies still need trusted data and research tools when conditions get more challenging.

That makes Thomson Reuters timely now. In the first quarter of 2026, revenue increased 10% to US$2.1 billion, while organic revenue rose 8%. Its Big 3 segments of legal, corporates, and tax and accounting delivered 9% organic growth and made up 85% of total revenue. That’s a strong mix because recurring revenue supports stability.

Thomson Reuters also has an artificial intelligence (AI) angle that feels more practical than speculative. Its legal and professional tools can help customers save time, which matters even more when companies cut costs. The risk is valuation and execution. AI products must keep proving their worth, and high expectations can punish even good companies.

Bottom line

If the recession gets worse, investors don’t need to panic-buy the highest yield or the cheapest stock. They can look for durable demand. Canadian Utilities offers essential services and dividend reliability. Dollarama stock offers value when households trade down. Thomson Reuters offers mission-critical tools for professionals. And all three offer a touch of income even with a $7,000 investment.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTCU$49.10142$1.84$261.28Quarterly$6,972.20DOL$176.5539$0.48$18.72Quarterly$6,885.45TRI$127.7954$3.60$194.40Quarterly$6,900.66

Together, they show three ways to stay invested without betting on a perfect economy. That mix could matter if headlines worsen and investors start paying more for dependable earnings again soon.

The post 3 Canadian Stocks to Buy if the Recession Gets Worse appeared first on The Motley Fool Canada.

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More reading

• 5 Canadian Stocks to Buy and Hold for the Next 5 Years
• 3 Undervalued Canadian Stocks to Buy Immediately
• Hydro One vs. Canadian Utilities: The Dividend Stock I’d Own Through 2026
• If I Could Only Buy and Hold a Single Stock, This Would Be It
• All-Weather TSX Stocks for Every Market Climate

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Dollarama and Thomson Reuters. The Motley Fool has a disclosure policy.