3 Canadian Stocks That Could Benefit From a Softer Economy

When the economy starts to soften, the best stocks are usually not the flashy ones. Investors tend to do better with businesses that sell essentials, collect recurring cash, or serve customers who do not disappear just because confidence slips. That’s why defensive income plays, necessity-based real estate, and utilities can all stand out when growth gets a little wobbly.

BCE

BCE (TSX:BCE) still fits a softer-economy setup for a reason. Canadians keep paying for wireless, internet, and connectivity, even when they pull back elsewhere. Over the last year, BCE stock also made some big moves to reshape the story, including its Ziply Fiber acquisition in the United States and a major push to simplify operations and improve cash flow. Furthermore, back in October, BCE stock lifted its 2028 cost-saving target to $1.5 billion, which gives investors a clearer sense of where management wants this business to go.

BCE stock reported full-year 2025 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $10.7 billion, up 0.7%, and free cash flow of $3.2 billion, up 10% from 2024. That helped after a bruising stretch that included a 56% dividend cut in 2025, which reset expectations but also gave the company more breathing room. Shares recently traded with a forward dividend yield of about 5.4%, a trailing price-to-earnings (P/E) near 4.9, and a forward P/E near 12.1. That is not a perfect setup, but for investors looking for income and a cheaper valuation in a shakier economy, BCE stock still looks relevant.

SRU

SmartCentres real estate investment trust (REIT) (TSX:SRU.UN) owns a huge portfolio of retail-focused real estate across Canada, with many properties tied to value-oriented and necessity-based shopping. Discount, grocery, and everyday-use tenants tend to hold up better than more discretionary retail. SmartCentres also keeps adding growth angles through self-storage, residential, and mixed-use development, so it is not just sitting there collecting rent and hoping for the best.

SmartCentres said fourth-quarter 2025 net rental income and other revenue rose 1.4% to $143.6 million, while funds from operations (FFO) per unit improved to $0.54 from $0.53 a year earlier. It also finished the year with 98.6% in-place and committed occupancy, which is the kind of number income investors love to see. Units recently traded around a trailing annual distribution yield of about 6.5%. The payout ratio still deserves attention, so this is not a risk-free income machine, but for investors who want monthly cash flow backed by high occupancy and defensive retail exposure, it is a very sensible fit.

AQN

Algonquin Power (TSX:AQN) is the turnaround pick of the group. Over the last year, the company got serious about fixing itself. Back in August 2024, Algonquin agreed to sell most of its renewables business for up to $2.5 billion to cut debt, with later leadership changes tied to that broader reset. That is not the smoothest story on the TSX, but it does show management finally dealing with the mess instead of pretending it would solve itself.

The latest results suggest the clean-up is starting to show. Algonquin reported full-year 2025 net earnings per share of $0.27 and adjusted net earnings per share (EPS) of $0.34, ahead of its prior guidance range, while using about $1.6 billion of net proceeds from asset sales to pay down debt. It also reaffirmed 2026 adjusted EPS guidance of $0.35 to $0.37 and said its regulated capital plan supports 5% to 6% compound annual rate-base growth through 2028. Shares recently traded with a forward yield near 4.2% and a forward P/E around 17. That is not screamingly cheap, but if the turnaround keeps working, it could still reward patient investors.

Bottom line

Put it all together, and these three stocks cover different parts of the softer-economy playbook. What’s more, $7,000 in each could bring in ideal income during a rebound.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTBCE$32.42215$0.00$0.00N/A$6,970.30SRU.UN$28.10249$1.85$460.43Monthly$6,996.90AQN$8.49824$0.36$296.64Quarterly$6,995.76

None is perfect, but in uncertain conditions, steady and improving usually beats exciting and fragile.

The post 3 Canadian Stocks That Could Benefit From a Softer Economy appeared first on The Motley Fool Canada.

Should you invest $1,000 in Algonquin Power & Utilities right now?

Before you buy stock in Algonquin Power & Utilities, consider this:

The Motley Fool Canada team has identified what they believe are the top 10 TSX stocks for 2026… and Algonquin Power & Utilities wasn’t one of them. The 10 stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 … if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have over $18,000!*

Now, it’s worth noting Stock Advisor Canada’s total average return is 94%* – a market-crushing outperformance compared to 85%* for the S&P/TSX Composite Index. Don’t miss out on our top 10 stocks, available when you join our mailing list!

Get the 10 stocks instantly #start_btn6 { background: #0e6d04 none repeat scroll 0 0; color: #fff; font-size: 1.2em; font-family: 'Montserrat', sans-serif; font-weight: 600; height: auto; line-height: 1.2em; margin: 30px 0; max-width: 350px; text-align: center; width: auto; box-shadow: 0 1px 0 rgba(0, 0, 0, 0.5), 0 1px 0 #fff inset, 0 0 2px rgba(0, 0, 0, 0.2); border-radius: 5px; } #start_btn6 a { color: #fff; display: block; padding: 20px; padding-right:1em; padding-left:1em; } #start_btn6 a:hover { background: #FFE300 none repeat scroll 0 0; color: #000; } @media (max-width: 480px) { div#start_btn6 { font-size:1.1em; max-width: 320px;} } margin_bottom_5 { margin-bottom:5px; } margin_top_10 { margin-top:10px; }

* Returns as of April 20th, 2026

More reading

• 2 High-Yield Dividend Stocks That Look Built to Hold for 10 Years or More
• 3 Dividend Stocks That Look Worth Adding More Of
• 2 TFSA Dividend Stocks I’d Lock In Now for Long-Term Income
• The Railway and Telecom Stocks the Market’s Writing Off Too Soon
• How to Make $300 Per Month Tax-Free From Your TFSA

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends SmartCentres Real Estate Investment Trust. The Motley Fool has a disclosure policy.