Canadian stocks with minimal tariff risk

Operating in well-insulated business sectors

Thanks to Donald Trump’s tariff wars, we are heading into the fourth major stock market correction in this still-young century.

The first came just a few months after the millennium rolled over, when an inflated tech sector collapsed and dragged down the rest of the market with it. It took Nasdaq more than a decade to retrace its losses.

Next came the great financial crisis of 2007-09 when bank stocks imploded. For a while, the entire global financial system teetered on the edge of a precipice. Canadian banks came through intact, but financial institutions in the U.S. and Europe were bloodied.

After more than a decade of relative quiet, the Covid pandemic blew out of China, hitting the markets five years ago this month. We survived that too.

If the recent market weakness turns into a major meltdown, it will have been triggered by President Trump’s unnecessary trade war.

Having already lived through three crashes in this century, you’d think investors would be acclimatized to market volatility by now. But, based on the emails I’m receiving, many are still uncertain what to do.

It’s a particularly difficult problem for income-oriented investors because falling interest rates are rapidly reducing the yields on safe-haven assets like money market funds, short-term bonds, and high interest ETFs.

Here are a few points to consider when choosing equity investments right now.

Safety and stability. Choose companies that are leaders in their sector and have strong balance sheets. They should have the resources to ride out a lengthy market downturn.

Limited tariff exposure. In most cases, it’s clear which companies and sectors are most vulnerable in a trade war. Automobiles and parts, lumber, steel and aluminum, agricultural products, and manufactured goods are on the front line of a tariff standoff.

Sustainable yield with growth potential. Look for stocks with an above-average yield that appears to be safe. A history of regular dividend growth is a bonus.

Here are three Canadian stocks from the recommended list of my Income Investor newsletter that meet these criteria. Prices are as of March 14.

Pembina’s contracted services model provides tariff protection

Pembina Pipeline Corp. (TSX: PPL). Based in Calgary, Pembina owns pipelines that transport hydrocarbon liquids and natural gas products produced in Western Canada. Its pipelines carry half of Alberta’s conventional oil and almost all of BC’s oil. It also owns gas gathering and processing facilities and an oil-and-natural-gas liquids infrastructure and logistics business. Its assets are mainly in Canada although it does operate some cross-border pipelines that terminate in Chicago.

The company recently announced record year-end results for 2024. Revenue was $7.4 billion, up 16.6% from 2023. Adjusted EBITDA was $4.4 billion, a year-over-year gain of 15.3%. Earnings were $1.9 billion ($3 per diluted share), a small gain from $1.8 billion ($2.99 per share) in 2023.

In its financial release, the company said Pembina does not expect any material near-term impact from tariffs “given the highly contracted, take-or-pay nature of its business.”

The company has a history of strongly defending its dividend, most recently during the pandemic market retreat.

Emera’s regulated utility business ensures stability

Emera Inc. (TSX: EMA). The Halifax-based utility reported fourth-quarter and 2024 year-end results in late February. Quarterly adjusted earnings per share grew 33% to $0.84 compared with $0.63 in the same period of 2023, driven by solid operating performance across all regulated utilities.

Adjusted net income for the full year was $849 million ($2.94 per share), compared with $809 million ($2.96 per share) in 2023. The increase in 2024 adjusted net income was primarily due to increased earnings across all of Emera’s utilities and increased corporate income tax recovery.

The company is targeting an average annual adjusted earnings per share growth of 5%-7% through 2027.

Power Corp.’s holdings have little or no tariff exposure

Power Corporation of Canada (TSX: POW) is a diversified holding company with interests in financial services, communications, and other business sectors through its wholly owned subsidiary Power Financial. Power Financial is the holding company for the Desmarais family’s financial interests. The company owns 66.8% of Great-West Life, Canada’s second-largest life insurer, as well as 62.1% of asset manager IGM Financial, which owns Investors’ Group and Mackenzie Investments. Power also owns 14.1% of European conglomerate Groupe Bruxelles Lambert SA (GBL) and 74% of Wealthsimple Financial, an online advisory platform.

For the third quarter of 2024, the company reported net earnings attributable to participating shareholders of $1.81 billion ($2.79 per share), compared with $1.789 billion ($2.69 per share) in 2023. The corporation's book value per share was $34 as of Sept. 30, 2024, compared with $32.49 at Dec. 31, 2023. Fourth quarter and year end results were released on March 19.

The nature of Power’s business means it has little or no tariff exposure.

The company pays a healthy dividend of $2.25 a year, to yield 4.%. Power Corp. usually raises its dividend annually but suspended increases for a time during the pandemic.

These companies are more insulated against the effects of tariffs than most. But they are equity investments and are subject to market risk, just as all stocks are. Before investing, check with your advisor to ensure your selections align with your financial objectives and your risk-tolerance level.

Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.

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Notes and Disclaimer

Content © 2025 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.

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