The S&P/TSX Composite Index is starting to display the signs of the market volatility expected to hit the Canadian stock market amid ongoing and rising tensions in the Middle East. After a solid start to March 2026, the Canadian benchmark index suddenly dipped. As of this writing, the index is down by 4.2% from its March 2, 2026 level.
The ongoing situation impacts the entire world, especially through oil supply disruptions. In light of these circumstances, investors must consider how they should allocate their investment capital to protect themselves from the impact of this geopolitical crisis. My best bet is to identify companies with solid free cash flow and balance sheets with resilient business models. Here are my top three picks.
Source: Getty Images
Fortis
Fortis Inc. (TSX:FTS) is a staple in many investor portfolios. The $39.9 billion market-capitalization company owns and operates several electric and natural gas utility businesses across Canada, the US, and the Caribbean. It provides essential services to millions of customers, primarily through long-term contracted assets in rate-regulated markets.
The company’s business model enables it to generate predictable cash flows, allowing management to comfortably fund capital programs and increase its quarterly payouts. Fortis stock has increased payouts to investors for over 50 consecutive years. Despite short-term volatility in the market weighing on its finances, the stock has a reliable track record that investors love.
As of this writing, FTS stock trades for $78.59 per share and pays investors $0.64 per share each quarter, translating to a 3.3 % annualized dividend yield.
Rogers Sugar
Rogers Sugar Inc. (TSX:RSI) is another essential business, but it has nothing to do with providing utility services. RSI is a $851.1 million market capitalization company in the business of refining and selling sugar and maple syrup in Canada. Sugar and maple syrup might not seem like the most exciting space in terms of rapid capital gains. However, it is a consumer staple that adds a defensive appeal to RSI stock.
A stormy market might otherwise devastate most stocks on the market. However, Rogers’ products are something people need in their daily lives, enabling the business to generate solid cash flows during periods when most other businesses cannot. As of this writing, RSI stock trades for $6.64 per share.
RSI stock pays investors $0.09 per share each quarter, translating to a 5.4 % annualized dividend yield that you can lock into your self-directed portfolio today.
Canadian Natural Resources
Canadian Natural Resources Ltd. (TSX:CNQ) is another essential business that might even benefit from the ongoing geopolitical crisis. CNQ is a $131.3 billion market-cap giant in the Canadian energy industry. The oil and natural gas production company can benefit from a potential shift in oil supply chains due to disruptions in the Middle East.
While it might face the impact of the situation impacting global oil supply, CNQ stock is the least vulnerable to the Strait of Hormuz being closed. Higher oil prices can improve margins for the oil producer with cost-effective operations. Lower operating costs, combined with higher energy prices, can send its share prices soaring.
As of this writing, CNQ stock trades for $62.96 per share and pays investors $0.625 per share each quarter, translating to a 4% annualized dividend yield.
Foolish takeaway
There is no way to tell how long the current sell-off will continue. Investing in shares of businesses that offer essential goods and services can be a safe bet to consider. Businesses that can continue generating revenue in uncertain market environments can provide relatively safer returns than non-essential businesses. To this end, FTS stock, RSI stock, and CNQ stock can be solid holdings for your self-directed portfolio.