Better than bonds? 3 defensive stocks to consider when volatility increases

Playing defensively can be a solid strategy, especially in times when investors see trouble on the horizon. I’m not sure where things go from here, and I imagine this is similar to other investors deciding whether to put capital into defensive stocks, or maintain robust exposure to top growth stocks.

In this article, I’m going to highlight the three top defensive stocks to consider right now.

Let’s dive in!

Newmont Corporation

In the world of the best gold diggers, Newmont Corporation (TSX:NGT) seems like an excellent opportunity to consider.

Most investors are well aware of the boom precious metals have experienced in recent years. Newmont has quietly turned 2025 into a reset year, exiting its higher-cost mines and integrating Newcrest. These moves have led to record profits and free cash flow of roughly $7.3 billion for the full year, and $2.8 billion in the fourth quarter alone. That kind of cash generation gives this gold great extraordinary freedom to choose between financing organic growth, paying down debt and increasing capital returns, even as gold prices cool.

The company’s balance sheet is in excellent condition, evidenced by a current ratio of just over twice as large and a very low debt-to-equity ratio of almost 0.17. At the same time, Newmont’s reserve base remains a key pillar of its defensive profile, with approximately 118 million ounces of gold and decades of production visibility ahead. This provides investors with long-term leverage for any new run in precious metals.

So for investors looking for top opportunities in the gold mining sector with low beta and high-quality cash flows, Newmont is now a great option to consider in my opinion.

Fortis

In the universe of steady-Eddy companies, Fortis (TSX:FTS) is another top pick of mine.

This largely regulated North American utility continues to deliver mid-single-digit earnings growth and dividend increases of 4 to 6%. Management recently increased its 2026-2030 capital plan to approximately $28.8 billion, supporting expected compound annual interest rate base growth through 2030. This interest rate base growth should provide the foundation for continued earnings per share (EPS) and dividend growth.

Crucially, at least for defensive investors, Fortis keeps its payout ratio within a comfortable zone. The dividend is expected to be roughly 73% of profit this year, well below the 80% threshold where sustainability issues often arise. Fortis’s balance sheet is A-rated, which reflects stable, predictable cash flows from regulated assets in multiple jurisdictions. This helps dampen volatility when markets become choppy.

Fortis trades on forward estimates around a price-to-earnings ratio in the low twenties (close to what many consider fair value) and is a reliable dividend stock to consider for those not looking for a high valuation right now.

Manulife financial

Finally, we come to another of my favorite defensive choices: Manulife financial (TSX:MFC).

This is a company that has been performing steadily and repeatedly posting earnings outside of one soft quarter. Over the past year, robust revenue and earnings growth have led to solid cash flow growth expectations, driven by robust margins. With expected earnings of almost a dollar per share in early 2026, I think this is a stock that could be on a trajectory of rising profitability that isn’t fully reflected in the share price.

The company’s retained earnings rose to about $1.5 billion from the first quarter of last year, and this year that number is expected to increase significantly. This should strengthen Manulife’s capital position and support continued buybacks and dividend growth.

For defensive investors, Manulife’s diversified global insurance and asset platform, growing earnings base and undemanding valuation differentials relative to earnings power present an attractive opportunity to capture above-market returns and modest growth from a financial giant that is finally starting to earn some respect from the market.