8 Top Recession-Proof Stocks To Buy in Canada for 2024

Are you feeling worried about the current state of the Canadian economy? You’re not alone. With inflation on the rise and interest rates rising, it’s no surprise that many people are concerned about another recession hitting the Canadian market.

But here’s the good news: there are ways to protect your investments, even in turbulent economic times. And one of the best ways to do that is by investing in recession-proof stocks in Canada.

Now, you might think, “Wait, aren’t all stocks affected by a recession?” And you’re not entirely wrong. However, certain industries and sectors tend to fare better than others during market downturns.

As someone who’s always looking for ways to safeguard my finances, I was curious about these so-called “recession-proof” stocks in Canada. So, I did some research and decided to share my findings with you in this blog post.

In this article, we’ll review some of the top recession-proof stocks in Canada that can help your portfolio stay afloat when the stock markets tumble. So, if you’re ready to learn about promising investment opportunities, keep reading!

8 Top Recession-Proof Stocks To Buy in Canada

We’ve researched and handpicked some of the most promising recession-proof stocks in Canada that you will want to take advantage of. These stocks are from industries and sectors that tend to perform well even during market downturns, making them a great option for investors who want to safeguard their finances.

So, whether you’re a seasoned investor or just starting out, read on to learn about these top-performing stocks and how they can help your portfolio thrive, no matter what the future holds.

1. Algonquin Power & Utilities (TSX: AQN/NYSE:AQN)

Algonquin Power and Utilities (TSX: AQN/NYSE: AQN) is a company that operates a diversified utility business. It delivers electricity, water, and natural gas to over one million connections in Canada.

Algonquin is a leader in renewable energy, with over 1.5 GW of installed renewable energy capacity. The company is committed to reducing its carbon footprint and aims to reduce its greenhouse gas emissions by 20% by 2025.

Since 2017, the company’s stocks have increased by 114%, outperforming some broader equity markets.

In terms of liquidity, Algonquin has a healthy current ratio of 1.44, indicating that it has enough current assets to cover its current liabilities. The company also has a low debt-to-equity ratio of 0.86, which suggests that it has a manageable level of debt.

Algonquin Power & Utilities is a strong, recession-proof stock option for investors looking for a stable, diversified utility company with solid growth potential and an attractive dividend yield.

2. Fortis (TSX:FTS)

Fortis (TSX: FTS) is North America’s most defensive stock and one of the best recession-proof stocks in Canada. Fortis is a regulated utility company in Canada that owns the means of generating power.

Utilities are essential services. It is nearly impossible to live without them. Your electricity is the last thing you want to shut down during a recession. Nobody wants to go cold in the winter, so Fortis contracts are usually locked in long-term, and it keeps raising its dividends.

As one of the best dividend-paying stocks in Canada, Fortis has an impressive 49-year track record of increasing its dividends. Investors can expect the company to maintain a steady annual dividend growth rate of 6% until 2025.

With its diversification, liquidity, and strong financial performance, Fortis is a top pick for investors in Canada.

The company has a 48-year dividend growth streak and intends to keep it growing at a 6% pace over the next six years.

3. Northwest Healthcare (TSX:NWH.UN)

Northwest Healthcare Properties REIT (TSX: NWH.UN) has high-quality healthcare properties and investments across big countries like Canada, Brazil, Europe, New Zealand, and Australia.

The company currently owns 190 properties covering about 15.4 million square feet of leasable area and leases office spaces to healthcare tenants. The government taxing power ultimately backs Northwest Healthcare; 80% of its revenue is supported directly or indirectly by funding coming from public healthcare.

NWH enjoyed an approximately 98% occupancy and high rent collection rates. It pays monthly dividends at $0.067 per share at a 6.4% dividend yield and a $0.80 annualised rate.

The company has a massive chance of potential growth as they are developing projects worth around $348 million.

4. Dollarama (TSX:DOL)

Dollarama (TSX: DOL) is one of the best recession-proof stocks in Canada. Dollarama sells discounted goods to Canadians for $5 or less. It has over 1000 locations across Canada and plans to expand to 2000 locations by 2031.

Many consumers become price sensitive during recessions and start looking for cheaper alternatives. When the economy is booming and people’s wallets are full of money, they may be less concerned about spending a few extra bucks on items they want to buy.

However, when times get tough, people will go to stores where they can get cheaper alternatives. They would go to stores like Dollarama instead of places like Walmart. Though Dollarama didn’t thrive during the COVID-19 bear market, it still fared better than banks and airlines during this time.

Dollarama has diversified its product offerings over the years, adding more higher-priced items to its inventory mix, and has expanded its presence in the Canadian retail market. Its consistent revenue growth and strong liquidity position make it an attractive investment opportunity in the Canadian retail industry.

5. Metro (TSX: MRU)

Metro (TSX: MRU) is one of the stocks you can trust in a recession. Metro is a company based in Montreal that operates as a retailer, distributor, franchisor, and manufacturer in the food and pharmaceutical sectors.

One sector that proved resilient during the 2020 market pullback is the grocery and pharmaceutical sector. People will always need this sector, no matter how tough things get. Investors trust that these essential services will not fall even during a recession.

Shares for the Metro stock climbed 2.9% in 2022 and hit an 18% increase from the previous year. Its sales have increased by 1.9% yearly, reaching about $4.34 billion. The stock possesses a favourable price-to-earnings ratio of 19 and offers a quarterly dividend of $0.275 per share.

6. Hydro One (TSX:H)

Hydro One (TSX:H) is a top utility company in Canada’s largest province. This year, the company’s shares have climbed 7.3%, which is 14% bigger than it was in the same period last year.

The company has delivered dividend growth every year since its debut on TSX. Its quarterly dividend is currently $0.28 per share, representing a 3.1% increase. Earnings per share of Hydro One climbed 15% to reach $0.52 in the first quarter of 2023.

Hydro One also has a diversified revenue stream, with approximately 60% of its revenue coming from regulated operations and 40% from unregulated operations, providing stability and growth opportunities.

Hydro One is a solid utility stock to consider for investors seeking long-term stability and income.

7. Corby Spirit and Wine (TSX:CSW.A)

Corby Spirit and Wine (TSX: CSW.A) is a company based in Toronto that manufactures, imports, and markets spirits and wines in Canada. During previous economic turmoil, alcohol has proven historically resilient. Alcohol consumption might increase during recessions.

Corby owns or represents top brands in Canada, like Lot 40 Canadian Whisky, Ungava Premium Gin, Polar Ice Vodka, and many others.

Currently, Corby offers a quarterly dividend of $0.24 per share, representing a 5.1% yield. Meanwhile, its adjusted net earnings increased by 7%, delivering adjusted revenue growth of 4%.

8. George Weston Limited (TSX:WN)

George Weston Limited (TSX:WN) is a Canadian company that operates through two subsidiaries specialising in real estate and retail. The company operates through Choice Properties, a real estate investment trust in Canada, and through Loblaw, which is Canada’s largest grocery retailer.

During recessions and market downturns, grocery retail stocks hold firmly, and due to increased food prices, these stocks will grow.

George Weston Limited has a solid financial performance, with strong revenue growth and profitability. It has a forward dividend yield of 2.06% and a dividend payout ratio of 34.43%.

With its diversified business model and strong financial performance, George Weston Limited is an attractive stock for investors seeking long-term growth and income.

What Does Recession-Proof Mean?

Any asset, industry, company, or other entity can be described as recession-proof if it is economically resilient to the effects of a recession.

Defensive stocks like healthcare or utilities, which consumers must purchase despite the economic situation, are often cited as recession-proof stocks in Canada. Other examples of recession-proof industries are the groceries and alcohol industries.

While some items may be termed recession-proof, as not all can withstand long recessionary periods, the consequences of an overdue recessionary period may be too much for some businesses and assets.

Notwithstanding, adding recession-proof assets such as Gold, Treasury bills, bonds, and cash to your investment portfolio will safeguard you against economic turmoil.

Defensive Stocks: Historically Recession-resistant Sectors

Not all stocks in the market have the resilience to fare well during recessions. However, some sectors will likely do well and thrive because people will still buy some goods and services even when financial times are tough.

Some of these sectors include:

Consumer Staples: Despite the economic situation, consumer staples will remain in high demand. During a recession, people will likely shift from eating restaurant meals to preparing them at home. Companies that supply food items, beverages, and household and personal products are stocks that will be in demand.
Healthcare: Companies in the pharmaceutical, biotech, healthcare equipment industries, and healthcare providers tend to be safer during recessions. The products and services they render will always be in demand.
Utilities: Stocks from companies that deliver water, gas, electricity, and independent or renewable power, can be trusted to hold even during tough times. Utility companies have limited competition and a stable cash flow. Their cheap Canadian stocks can do wonders to your portfolio.
Fine wine and the alcoholic beverage industry: during the Great Recession in 2008, the sales of alcohol grew by over 9%. Wine, distilled beverages, and beer will always be in demand, even during a recession.
Discount retailers and grocery stores: stocks from companies that offer discount sales and lower-priced items during a crisis are usually resilient to a recession.

Final Thoughts on the Best Recession-Proof Stocks in Canada

Investing in recession-proof stocks is a smart move that can help weather any economic storm. The Canadian market offers several great well-diversified, stable, and profitable options.

Canadian recession-proof stocks provide a great starting point for building a portfolio that can weather any storm and protect your portfolio from any economic downturn.

By investing in companies with a history of stability and profitability and focusing on companies with strong fundamentals and diverse revenue streams, you can sleep easy at night; rest assured that your investments are safe even if the market takes a turn for the worse.

So why not take the first step towards building your own recession-proof stock portfolio today? Consider adding at least one of these stocks to your list and see how they perform in the months and years to come.

FAQs on the Best Recession-Proof Stocks in Canada

What stocks perform well during a recession?

Healthcare, alcohol and wines, food, consumer staples, and basic transportation are examples of industries whose stocks will perform well in recessions.

What are the most recession-proof investments?

Sectors performing well during recessions include energy, utilities, healthcare, real estate, and many more. Investing in these sectors will safeguard your portfolio during a recession.

Are there any stocks that are recession-proof?

Yes. Grocery stores and packaged food makers are highly recession-resistant, and other consumer staples such as household and personal products. they tend to experience stable demand in recessions.