Why It’s Time to Play Defence
Canadian markets have been climbing, but when markets rise sharply, savvy investors know it’s also time to think about protection. Rapid rallies can signal potential volatility ahead, prompting many to shift toward defensive assets such as gold, which recently surged past US$4,000 per ounce.
Beyond commodities, there are several high-quality defensive plays on the TSX that can help investors preserve capital while still generating steady returns. Here are three standout picks for those looking to strengthen their portfolios for both the short and long term.
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- Canadian Apartment Properties REIT (TSX:CAR.UN)
Canadian Apartment Properties REIT is a leading owner, operator, and acquirer of multi-unit residential rental properties across Canada and Europe. Its strategy focuses on providing stable monthly distributions while driving income and long-term unit growth, making it a classic defensive play.
The REIT’s low exposure to commodity cycles and reliance on residential rental demand provide built-in resilience. Its defensive strength comes from high occupancy rates, steady rental income, monthly distribution yields, and active acquisitions.
In the second quarter, CAR.UN announced five new acquisitions and maintained a $1.55 per unit annual distribution. Coupled with a share buyback program, the company offers stability and potential upside, making it a strong pick for income-focused defensive investors.
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- Waste Connections (TSX:WCN)
For investors seeking exposure to essential services, Waste Connections is a top choice. Garbage collection is a necessity, which gives the company’s business model predictable, recurring revenue that’s largely insulated from economic cycles.
In the most recent quarter, the company reported US$2.4 billion in revenue, up 7.1% year-over-year, and reiterated its full-year guidance — a clear sign of operational stability.
Waste Connections also returns value to shareholders through dividends and buybacks. While its premium valuation reflects its defensive appeal, the company’s essential service model and strong long-term outlook make it a reliable option for investors seeking downturn protection.
- Dollarama (TSX:DOL)
It might surprise some to see a retail stock on a defensive list, but Dollarama’s low-cost model makes it a standout in uncertain times. Operating a network of dollar and value retail stores across Canada, Dollarama benefits from consistent demand for affordable goods.
The company has expanded internationally through Dollarcity in Latin America and the acquisition of Reject Shop in Australia, replicating its domestic success abroad. This diversification has created strong and stable income streams.
Management recently renewed its share buyback program, signaling confidence in its outlook. While it may not offer high yields, Dollarama’s steady growth, value-focused business, and defensive characteristics make it a resilient choice among retailers.
Bottom Line
Adopting a defensive strategy doesn’t mean abandoning growth entirely. Instead, it’s about balancing your portfolio with reliable, resilient businesses that can weather market swings. CAR.UN, WCN, and DOL offer diversification, income stability, and long-term strength — key ingredients for investors looking to safeguard gains and manage risk.
As always, investors should consult a financial advisor to ensure these picks align with their personal goals and risk tolerance.
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