I look ahead to 2026 with trepidation. Anything could happen. We could experience a repeat of 2025, with stocks moving steadily higher. Or, at the other extreme, we could be hit by a bear market (loss of 20%+).
The last bear ran from January to October 2022 and saw the S&P 500 drop 25.4%. Historically, a bear market comes around every three and a half years, so 2026 would be right on target.
It may not happen, of course. Averages are just that – averages. But I suggest it would be a good idea to adjust your portfolio, just in case.
That doesn’t mean selling all your equity positions. But you may wish to rotate into stocks that are well positioned to ride out any storm with minimal losses, while offering upside potential if things continue to go well. Here are three I recommend.
Walmart (NDQ: WMT)
Originally recommended on Oct. 26/20 (#22038) at $22.43 (split-adjusted). Closed Friday at $112.76. (All figures in US dollars.)
Background: Walmart is the world’s largest bricks and mortar retailer with 10,750 stores in 19 countries, plus an expanding e-commerce operation. It employs some 2.1 million people worldwide and had revenue in the latest fiscal year of $648 billion.
Stock split: On Feb. 26, 2024, Walmart split its shares 3 for 1. So, for every 100 shares you previously owned, you now have 300.
Performance: The year just ended was a choppy one for Walmart, but, overall, the stock trend was up, and the shares hit a new all-time high of $117.45 in December. The shares ended 2025 with a gain of about 25%. The stock is up more than 400% since the original recommendation, not including dividends.
Recent developments: The company released third quarter 2026 results (to Oct. 31) and they showed continued gains. Revenue was $179.5 billion, up 5.8% from the same period last year (6% in constant currency). Global ecommerce sales grew 27%.
Adjusted earnings per share were $0.62, up from $0.58 in the third quarter of fiscal 2025. This does not include the gain of $0.20 per share on investments and $0.02 per share on legal matters.
Free cash flow was $8.8 billion, an increase of $2.6 billion.
On Dec. 9, the company announced it had transferred the listing of its common stock and bonds to Nasdaq, from the NYSE.
Dividend and buybacks: The stock pays a quarterly dividend of $0.235 per share ($0.94 a year) to yield 0.8% at the current price.
The company repurchased 75.3 million shares in the first three quarters at a cost of $7 billion.
Comments: Donald Trump has branded the affordability crisis in the US as a Democrat-inspired “hoax”. Consumers aren’t buying it. Some 57% of voters said in a Harvard CAPS/Harris poll released last month that Trump was “losing the battle against inflation,” according to National Public Radio.
What happens when people are having trouble making ends meet? They search out cheaper alternatives. Who is at the top of the list? Dollar stores and Walmart.
That’s why I think Walmart shares will continue to perform well in 2026. Financially stretched consumers will keep coming because the affordability crisis isn’t going away soon.
Action now: Buy.
Fortis Inc. (TSX, NYSE: FTS)
Originally recommended on Aug. 15/05 (#2531) at $20.80. Closed Friday at C$71.25, US$51.90.
Background: Fortis is a regulated utility that focuses on electricity and natural gas distribution. Based in St. John’s, Newfoundland and Labrador, it has operations in Canada, the US, and the Caribbean. The company had $73 billion in assets at the end of 2024. It has about 9,700 employees.
Performance: The stock hit an all-time high of $74 in November.
Recent developments: Fortis reported third quarter net earnings attributable to common equity shareholders of $409 million ($0.81 per share). Adjusted net earnings per sharewere $0.87, up from $0.85 in the third quarter of 2024. On a year-to-date basis and excluding the impact of the disposition of FortisTCI, net earnings increased by $114 million, or $0.18 per share, compared to the same period in 2024.
Dividend: Fortis raised its quarterly dividend to $0.64 per share ($2.56 per year), effective with the November payment. The shares yield 3.6% at the current price.
Comments: Utilities like Fortis offer steady, sustainable cash flow. Plus, interest rate declines tend to push their share prices higher. Unless inflation surges in 2026, I think we’re likely to see more interest rate cuts, led by a new look Federal Reserve Board with a Trump-appointed chair.
Action now: Buy.
The Royal Bank of Canada (TSX, NYSE: RY)
Originally recommended by Gavin Graham on June 8/15 (#21521) at C$79.58, US$63.95. Closed Friday at C$234.57, US$170.78.
Background: RBC is the largest bank in Canada, with 23% market share. It is one of the ten largest in North America. It has strengths in retail banking, investment banking, and asset management plus the largest share of mortgages and corporate lending in Canada.
Performance: The stock ended 2025 with a gain of 35% for the year, not including dividends. Except for blips in April and July, the share price was on the rise for most of the year and is currently trading near its all-time high.
Recent developments: The Bank reported its fourth quarter and year-end results (to Oct. 31) and the results were impressive. Net income for fiscal 2025 was $20.4 billion, up $4.1 billion or 25% from the prior year. Diluted earnings per share (EPS) were $14.07, up 25% over the prior year. Adjusted net income and adjusted diluted EPS of $20.9 billion and $14.43 were up 20% and 19%, respectively, from 2024.
Return on equity for the year was 16.3%, up from 14.4% last year. The CET1 ratio was 13.5%.
Dividend: Royal Bank announced in early December that its board of directors has declared an increase to its quarterly common share dividend of 10 cents, or 6%, to $1.64 per share ($6.56 a year). The new rate kicks it with the Feb. 24 payment. The yield at the new rate is 2.8%.
Comments: Bank stocks are not immune from meltdowns, as we saw during the financial crisis of 2007-09. But even during that tempest, Canada’s major banks remained profitable, avoided bailouts, and fared better than their US counterparts. We should expect something similar if there is another bear market in our near-term future.
I like RBC because of its size and strength, but any of Canada’s Big Six banks would fit in your portfolio.
Action now: Buy.