I think passive investing through ETFs is always a good strategy, and that is the core of my personal investing mantra. But for the stock pickers (and who doesn’t like picking winners), I also have a few potential winners for the new year that I think investors would do well to take into account.
That said, let’s take a look at two top Canadian stocks that I think could provide plenty of downside protection for those who think long-term.
Boyd Group
As the average age of cars on North American roads continues to rise (and there are expectations that this trend will continue for some time), former growth stock champion Boyd Group (TSX:BYD) is one of my top ideas for 2026.
The thesis surrounding this company is relatively simple. If car owners keep their cars in use longer, there will be a greater incentive to fix up their car and keep it running than to take out a new car loan with a sky-high rate. And because new and used vehicles are now among the most expensive ever (with the average new car costing just over $50,000 each), this is a trend that I believe will continue until prices or interest rates drop meaningfully.
I don’t expect this to be the case in 2026 either, so Boyd Group (one of the largest auto body companies in North America) remains a solid bet. As the company continues to consolidate this fragmented sector and improve its pricing power (and margins), I think this year’s modest 3% gain could be the buying opportunity long-term investors are looking for.
RBC 1-5 Year Laddered Canadian Bond ETF
Another key option that I think Canadian investors can consider for meaningful upside potential if rates fall (but also portfolio protection in case stocks generally fall) is the RBC 1–5 Year Laddered Canadian Bond ETF (TSX:RLB).
This ETF offers investors exposure to short-term Canadian bonds. For those who think the short end of the yield curve is likely to fall further as Tiff Macklem and the Bank of Canada continue to cut rates, this is how I would play this trend.
With a current dividend yield of 3.2% and a short-term bond portfolio, investors won’t see meaningful swings in long-term interest rates. Long-term interest rates can still fluctuate due to tariff, trade or macroeconomic issues, which have affected this sector in the past. In other words, I view this ETF as one of the safer ways to capitalize on declining returns in the coming years.
Importantly, this ETF offers these returns in a ladder form, providing more consistent income for those looking to generate such returns, which can be reinvested in other assets over time. Instead of parking your money as cash inside the portfolio, this is the way to stay invested and earn returns while you wait for better opportunities to present themselves.
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