Today, the Commerce Department announced that the United States’s retail sales grew 0.2% in February – lower than the consensus estimate of 0.6%. Lower-than-expected retail sales have raised concerns about economic growth amid the escalating trade war. Besides, Goldman Sachs has lowered its 2025 GDP forecast for the United States from 2.4% to 1.7%.
Considering all these factors, I expect the volatility in the global equity markets to continue. Amid the uncertainty, investors should look to strengthen their portfolios with quality defensive and dividend stocks. Against this backdrop, here are my three top Canadian picks.
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Fortis
Fortis (TSX:FTS) would be an excellent defensive bet due to its regulated asset base, consistent dividend growth, and healthier growth prospects. With 99% regulated assets and low-risk transmission and distribution businesses, the electric and natural gas utility company’s financials are less prone to macroeconomic fluctuations. Thus, the company’s cash flows are reliable and predictable, facilitating its consistent dividend payouts. It has raised its dividends for 51 years, with its forward yield currently at 3.8%.
Moreover, Fortis continues to expand its rate base with a five-year capital investment plan of $26 billion. These investments could grow its rate base at an annualized rate of 6.5% through 2029 to $53 billion. Meanwhile, the company expects to generate around 70% of these capital investments from the cash generated from its operations and dividend reinvestment plan. So, these investments would not substantially raise its debt levels. Further, the company could also benefit from falling interest rates, given its capital-intensive business. Amid these growth prospects, Fortis’s management hopes to maintain its dividend growth through 2029 at an annualized rate of 4–6%. Considering all these factors, I believe Fortis would be an excellent buy at these levels.
Waste Connections
Another top defensive stock I am betting on is Waste Connections (TSX:WCN), which collects, transfers, and disposes non-hazardous solid waste in the United States and Canada. It has expanded its business through organic growth and strategic acquisitions, supporting its financial growth. Despite its aggressive acquisition strategy, it enjoys higher operating margins as it operates primarily in exclusive and secondary markets, thus facing lesser competition.
Moreover, the Toronto-based waste management company is constructing renewable natural gas and resource recovery facilities, which could become operational in the coming years. Further, its continued acquisitions could support its financial growth. The company also is adopting new technologies to improve employee safety and drive operating efficiency. It has also enhanced its employee engagement program, leading to lower employee turnover and margin expansion. Amid these growth initiatives, the company’s management expects its topline to grow 6.8% in 2025 while its EBITDA (earnings before interest, tax, depreciation, and amortization) margin could expand by 50–80 basis points.
Considering its healthy underlying business and impressive growth prospects, I expect the uptrend in WCN’s financials and stock price to continue despite the uncertain macro outlook.
Enbridge
My final pick would be a Canadian energy giant, Enbridge (TSX:ENB), which has rewarded its shareholders by paying dividends for 70 years. The energy infrastructure company’s financials are less prone to commodity price fluctuations due to its cost-of-service regulated rates and long-term take-or-pay contracts. Also, supported by its healthy and predictable cash flows, the company has raised its dividends for 30 consecutive years, with its forward dividends yield currently at 6.1%.
Moreover, Enbridge has recently acquired three utility assets in the United States for $19 billion, which could boost its cash flows further. The company’s management also expects to put around $23 billion of projects into service through 2027, thus supporting its financial growth. Amid these growth initiatives, the management expects its adjusted EBITDA to grow at 7–9% through 2026 and 5% after that.
Besides, given the integrated nature of the Canadian and United States energy industries, the volume of Canadian oil exports to the United States would not decline immediately despite tariff imposition. So, Enbridge’s management expects tariffs not to substantially impact its financials, thus making its future dividend payouts safer.
