After a challenging beginning this month, the S&P/TSX Composite Index has bounced back strongly and has been hitting new highs for the last few days. The slashing of benchmark interest rates by the United States Federal Reserve by 50 basis points has improved investors' optimism, driving the equity markets. However, concern over global growth amid prolonged high interest rates and geopolitical tensions still persists. If you are also concerned about these factors, you can strengthen your portfolios with these three defensive stocks.

Waste Connections

Waste Connections (TSX:WCN) is a waste management company that operates in secondary and exclusive markets across Canada and the United States. So, it faces less competition, thus allowing it to enjoy higher margins. Given the essential nature of its business and aggressive expansion through strategic acquisitions and organic growth, the company has grown its financials and stock price. Over the last 10 years, the company has returned over 570% at an annualized rate of 21%.

Meanwhile, the Toronto-based waste management company has acquired 18 assets this year as of July 24, which could contribute $500 million to its annualized revenue. Besides, it has signed multiple definitive agreements in the franchise markets that could contribute an additional $150 million to its annualized revenue. Further, the company is building several renewable natural gas and resource recovery facilities, which could become operational in the coming years.

Moreover, WCN has raised its dividends at an annualized rate of 14% since 2010 and currently offers a forward dividend yield of 0.65%. Last month, it approved a new share purchase plan, which would lower its share count by 5% by August 11, 2025. Considering its solid track record and healthy growth prospects, I believe WCN would strengthen your portfolios.

Dollarama

Dollarama (TSX:DOL) is a Canadian discount retailer operating 1,583 stores across Canada. The company has adopted a superior direct-sourcing model, increasing its bargaining power while lowering intermediatory expenses. So, the company offers a wide range of consumer products at attractive prices and thus enjoys healthy same-store sales even during a challenging macro environment. These solid sales and consistent store network expansion have driven its stock price. Over the previous 10 years, Dollarama has delivered around 800% of returns at an annualized rate of 24.6%.

Meanwhile, Dollarama continues to expand its store network and expects its store count to reach 2,000 by the end of 2031. Besides, it recently raised its stake in Dollarcity, which operates value stores in Latin America, by 10% to 60.1%. The company also has an option to increase its stake by an additional 9.9% by December 31, 2027. These growth initiatives could boost its financials in the coming years, thus driving its stock price despite the uncertain outlook.

Hydro One

Hydro One (TSX:H) is an electric utility company with no material exposure to commodity price fluctuations. With 99% of its business rate regulated, its financials are less susceptible to market volatility. Its unregulated business forms 1% of its asset base, offering additional growth opportunities. Since 2018, the company has grown its rate base at an annualized rate of 5%. Besides, it has undertaken several cost-cutting initiatives, which have delivered around $1.5 billion of savings since 2016. Amid these solid operating performances, the company has returned 124% over the last five years at an annualized rate of 17.5%.

Further, Hydro One is continuing with its $11.8 billion capital expenditure plan, which would grow its rate base at an annualized rate of 5% through 2027. Along with rate base expansion, favourable rate revisions, and cost-cutting initiatives could boost its financials in the coming years. The company's management expects its EPS to grow 5–7% annually through 2027. Given its solid underlying regulated business and healthy growth prospects, I believe Hydro One would be an excellent buy.

Moreover, Hydro One, which has raised its dividends at an annualized rate of 5% since 2016, currently offers a forward dividend yield of 2.7%. The company's management also hopes to raise its dividends at an annualized rate of 6% through 2027.