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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 – that is, a loss of 20 per cent or more.
The last bear ran from January to October, 2022, and saw the S&P 500 drop 25.4 per cent. Historically, a bear market comes around every 3½ years, so 2026 would be right on target.
It may not happen, of course. Averages are just that – averages. But I suggest adjusting your portfolio, just in case.
You can do this by rotating 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 that were recommended in my Internet Wealth Builder newsletter.
Walmart Inc.
Originally recommended on Oct. 26, 2020, at US$22.43 (split-adjusted). Closed Friday at US$112.76.
Background: Walmart WMT-N is the world’s largest brick-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 US$648-billion.
Stock split: On Feb. 26, 2024, Walmart split its shares three for one. So, for every 100 shares you previously owned, you now have 300.
Performance: The year just ended was a choppy one for Walmart’s share price but, over all, the stock trend was up, and the shares hit a new all-time high of US$117.45 in December. The shares ended 2025 with a gain of about 25 per cent. The stock is up more than 400 per cent 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 US$179.5-billion, up 5.8 per cent from the same period last year (6 per cent in constant currency). Global e-commerce sales grew 27 per cent.
Adjusted earnings per share were US$0.62, up from US$0.58 in the third quarter of fiscal 2025. This does not include the gain of 20 US cents a share on investments and two US cents a share on legal matters.
Free cash flow was US$8.8-billion, an increase of US$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 US$0.235 a share (US$0.94 a year) to yield 0.8 per cent at the current price. The company repurchased 75.3 million shares in the first three quarters at a cost of US$7-billion.
Comments: Donald Trump has branded the affordability crisis in the United States as a Democrat-inspired “hoax.” Consumers aren’t buying it. Some 57 per cent of voters said in a Harvard CAPS/Harris poll released last month that Mr. 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.
Fortis Inc.
Originally recommended on Aug. 15, 2005, at $20.80. Closed Friday at $71.25.
Background: Fortis FTS-T is a regulated utility that focuses on electricity and natural gas distribution. Based in St. John’s, it has operations in Canada, the U.S. 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 a share). Adjusted net earnings per share were $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 a share, compared with the same period in 2024.
Dividend: Fortis raised its quarterly dividend to $0.64 a share ($2.56 a year), effective with the November payment. The shares yield 3.6 per cent at the current price.
Comments: Utilities such as 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.
Royal Bank of Canada
Originally recommended on June 8, 2015, at $79.58. Closed Friday at $234.57.
Background: RBC RY-T is the largest bank in Canada, with 23-per-cent market share, and one of the 10 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 per cent 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 they were impressive. Net income for fiscal 2025 was $20.4-billion, up $4.1-billion or 25 per cent from the prior year. Diluted earnings per share (EPS) were $14.07, up 25 per cent over the prior year. Adjusted net income of $20.9-billion and adjusted diluted EPS of $14.43 were up 20 per cent and 19 per cent, respectively, from 2024. Return on equity for the year was 16.3 per cent, up from 14.4 per cent last year. The CET1 ratio was 13.5 per cent.
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 per cent, to $1.64 a share ($6.56 a year). The new rate kicks in with the Feb. 24 payment. The yield at the new rate is 2.8 per cent.
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 and avoided bailouts. Not one failed, or even came close. We should expect something similar if there is another bear market in our near-term future.
Gordon Pape is editor and publisher of the Internet Wealth Builder and Income Investor newsletters.