We take the services provided to us in our homes, apartments, and businesses for granted. No one pays any heed to the utility industry unless something goes wrong; for example, you find yourself without tap water when there is a power outage or out of the blue. This could be because we don’t go out of our way to purchase these services. These services are delivered to our door in exchange for a hefty bill, yet paying the bills is more of a duty than a conscious decision.
Utilities play an essential role in our day-to-day lives. When it comes to our world’s infrastructure, they are the equivalent of blood in our veins. Nothing works when the electricity goes out, and we’re back in the dark ages. Nothing in our world is more stable than utilities as a company. The utility industry encompasses businesses that provide essential services such as water, sewerage, electricity, dams, and natural gas. With a market capitalization of over $1 trillion, it is a major sector and a crucial element of the Canadian economy.
Utilities are a popular long-term buy-and-hold option since they are solid assets that pay a regular dividend to owners. Dividend yields on Canadian utility stocks are often higher than those on other Canadian stocks. Such equities become appealing during economic downturns with low-interest rates like the Current COVID-19 pandemic.
5 Canadian Utility Stocks You Should Invest In
Here are amazing utility stock options for Canadian investors to invest in and ensure a profitable result.
Algonquin Power & Utilities Corp. (TSX:AQN)
Algonquin Power & Utilities Corp. is a rapidly expanding renewable energy and utility company with over $16 billion assets across North America and abroad. Algonquin Power & Utilities Corp generates, transmits, and distributes energy in North America. In addition, Algonquin owns and operates regulated water, natural gas, and electricity distribution utilities in the United States as part of its distribution group. This division generates the majority of the company’s revenue, with natural gas distribution accounting for the majority of that revenue.
On January 3, 2022, Algonquin announced that Liberty Utilities (Eastern Water Holdings) Corp., a wholly-owned subsidiary of AQN, completed the previously announced acquisition of New York American Water Company, Inc. from American Water Works Company, Inc. for a purchase price of approximately $608 million. In addition, on October 26, 2021, the company acquired Kentucky Power Company and AEP Kentucky Transmission Company for a total purchase price of roughly $2.846 billion.
With $528.6 million in revenue, the corporation recorded a 40% rise in revenue compared to the third quarter of 2020. Trading at $18.09 as of February 26, 2022 (1:43 am), the company holds a bright future, making it the best time to invest in it. A dividend yield of 4.749% and a P/E value of 14.30 vouches for its profitability.
Canadian Utilities Limited (TSX:CU)
Canadian Utilities Limited is a utility company and a subsidiary of Atco’s logistics company. Electricity (generation, transmission, and distribution), pipelines & liquid (natural gas and water), and Retail Energy are the company’s primary divisions. Based in Calgary, Alberta, the company holds $20 billion in assets and primarily operates in Canada and Australia, with some programs in the United States and Mexico. Atco Energy, a significant partnership formed by Canadian Utilities, delivers Alberta low-cost and ecological energy solutions.
On November 10, 2021, Pacific Northern Gas Ltd. (PNG) and ATCO Future Fuel RNG Limited Partnership (ATCO Future Fuel) announced a deal to sell and buy Renewable Natural Gas (RNG) from ATCO Future Fuel’s new biomethane facility in Two Hills County, Alberta. As a result, Canadian Utilities Limited earned $586 million ($2.17 per share) in 2021, up by $51 million ($0.21 per share) from the previous year’s $535 million ($1.96 per share). Currently, the company offers a dividend yield of 5.042%.
Trading at $35.24 as of February 26, 2022 (6:40 am), analysts deem this company an outperformer in its field. Furthermore, a market cap of 9,490,021,735 and a healthy trade volume of 455,182 speak for themselves. It has a 10-year CAGR of 18.4% and is nearly a bargain at its current price.
Fortis Inc. (TSX:FTS)
Fortis operates in Canada and the United States, serving more than 3.4 million electricity and gas utility customers. The company holds $58 billion in assets and has smaller stakes in electricity generation and several other Caribbean utilities. ITC, a Fortis subsidiary, manages electric transmission in seven states across the United States, with over 16,000 miles of high-voltage transmission lines carrying a peak load of over 26 gigawatts.
FortisBC, FortisAlberta Inc., Central Hudson Gas & Electric, Tucson Electric Power, UniSource Energy Services, Newfoundland Power, Maritime Electric, FortisOntario, Caribbean Utilities, FortisTCI, Belize Electricity Limited are some of the subsidiaries of Fortis Inc. The corporation earned a revenue of $9.4 billion while it reported net earnings of $1,231 million, or $2.61 per common share in the fiscal year 2021.
The company supports and exercises renewable energy production, one of the fastest-growing utilities. By 2021, a 20% decrease in Scope 1 emissions was achieved, supporting a 75 percent reduction target by 2035. Trading at $58.15 as of February 26, 2022 (7:10 am), the company promises a decent dividend yield of 3.68%. The current market cap of this renewable energy company is 27,615,435,000 and is expected to grow in the coming years as the world steers towards clean energy.
TransAlta Renewables Inc. (TSX:RNW)
TransAlta Renewables Inc. is a renewable energy company that owns and operates energy generation and electricity transmission facilities. For about a century, the company has been in business and is well-versed in designing, operating, and maintaining renewable energy-producing facilities, especially hydro-powered.
Canadian Wind, Canadian Hydroelectric, and Canadian Gas are the operating business segments. The corporation owns many wind farms in Alberta, Ontario, New Brunswick, and Quebec through its Canadian Wind section. The corporation holds over 100 megawatts of net hydroelectric production capacity under the Canadian Hydro segment across various river systems. A cogeneration facility in Sarnia, Ontario, is owned by TransAlta as part of its Canadian Gas sector. In addition to wind and solar projects in Wyoming and Minnesota, TransAlta owns the South Hedland Power Station and the Fortescue River Gas pipeline in Australia.
The company made $150 million in earnings before taxes, up by 23% from 2020, while $336 million in cash flow from operating activities, up by 26% from 2020. Trading at $17.01 as of February 26, 2022 (7:26 am), the company has set an attractive dividend yield of 5.526%, making it the best time to invest in this company.
Emera Incorporated (TSX:EMA)
Emera Inc., a $34 billion diversified energy and services firm in North America, is a market leader. The firm generates, transmits, and distributes electricity and gas and provides other utility energy services. It also has renewable energy assets in its portfolio. Emera has operations in Canada, the United States, and the Caribbean countries, having a consumer base of 2.5 million across the globe. Emera is striving to achieve net-zero carbon emissions by 2050.
Net income for the fourth quarter of 2021 was $324 million, or $1.24 per common share, compared to $273 million, or $1.09 per common share, in the fourth quarter of 2020. The year-to-date adjusted EPS increased by $0.13 to $2.81 from $2.68 in 2020. The dividend yield for Emera stands at 4.472%, while it holds a market cap of 15,478,712,000.
The trade volume of 798,085 demonstrates the dynamic sale and purchase of these Canadian stocks. Trading at $59.26 as of February 26, 2022 (7:42 am), the company is projected to show immense growth this year. Additionally, the dividend yield for this company looks promising for investors looking for safe long-term investments.
Why You Should Invest In Utility Stocks
Utilities play a crucial role in modern economies. Consider how life would be if you didn’t have access to electricity, clean water, or trash collection. Things would not be the same.
Utility firms have profited from the fact that basic consumer conveniences such as power and running water are highly valued. Some utilities are among the world’s most successful businesses, with constant revenue and growth. It’s no surprise that utility stocks appeal to so many investors. Utility stocks are frequently intended to be a low-volatility, income-producing safe dividend stock of a portfolio. Utility firms operate in a highly regulated industry with predictable financial flows. It allows for the payout of hefty dividends. As a result, utility businesses with dividend payout ratios much above 50% are easy to come by. In other words, they are boring, and for investors who rely on their stocks for dividend income, boring is excellent!
Experts scoff when someone claims that a stock can only go one way. There’s always a danger that whichever stock you’re involved in inside any industry will go down in value. Nonetheless, the utility industry is one in which the strong players are most likely to enjoy improvements in the future.
As a result, the companies in the sector that have established the best infrastructure and continue to build their infrastructure will most likely continue to grow simply because the human population expands every day.
The Bottom Line
Utility stocks may appear so safe that they never decline in value. This, however, is far from the truth. No investment is entirely risk-free, and there is always the possibility of failure. However, utility stocks seldom lose money and, for the most part, increase at a consistent rate, albeit a relatively modest one.
Best Canadian Utility Stocks
The year first appeared on Motley Fool Canada, and it’s the best dividend you can buy in the US and Canada at the moment. The best dividend shares of the year in Canada: The Best of the Year, “which debuts on Motley Foolproof. And it also appears on Fool.com, along with a list of the top 10 dividends in North America.
The year first appeared on Motley Fool Canada, and it’s the best dividend you can buy in the US and Canada at the moment.
In Dividend Diversify, utility stocks are the holding model for our dividend portfolio. All three make rich because they pay dividends, and the dividend is one of the essential factors in a company’s long-term financial health.
The Canadian dividend stocks mentioned above and the lesser-known Canadian dividend stocks are great strategies. I use this to focus on dividend growth stocks in my articles and also if I want a diversified portfolio of dividend securities – including undervalued dividend stocks. This article focuses on the best Canadian stocks for dividend diversification in the United States. Also, check out my top 10 stocks of Canadian utilities in recent years and see which stocks my fellow dividend bloggers pick.
TSX: CU) also has a record of consistently increasing returns for investors with high payouts. Due to its long dividend growth streak, Fortis is considered one of Canada’s leading dividend stocks and has always generated sustainable cash flows.
I think a good example is Emera Inc. (TSX: E), which has a dividend series of over eight years. Although the company has excellent and strong dividend growth, it has increased its dividend every calendar year for more than two decades.
This is an impressive series, and if you look at the US Dividend Champions list, you will find that most of these stocks have a long history of dividend growth (highlighted in red). Overall, utility stocks will offer you a good dividend, but what bothers me about them is that they can drip – drip – their holdings will be pooled at an optimal rate. But, overall, they have delivered the best dividend, and if it can grow your holdings at a reasonable rate, these utility stocks will offer you a lot of potential for long-term dividend growth.
The bottom line is that you should have enough money to invest in 25-30 dividend shares over the long term – for 25-30% of your dividend shares.
If you want to make a good investment, read on for the best Canadian dividend shares to buy and hold. They are seen as potential top dividends and help you get tax relief. And if you buy or have these shares as free subscription shares, it’s an excellent investment for you. So if you want to make the most of your investment, always read the best dividend shares for your money.
Y Finance has a dividend auditor, which we regularly use to generate investment ideas. CDASL) is an excellent source of information on dividend auditing for Canadian companies that have increased their dividends for five or more years in a row. They will retain the highest-yielding stocks and their best tax benefits over the long term.
If you want more ideas, The Globe and Mail have a list of 14 dividend-paying stocks that can boost your portfolio. You can skip the detailed analysis of the utility industry and go directly to the top 5 utilities to buy. Buying and holding these Canadian dividend stocks is not only a great long-term investment strategy but can also help you make more efficient investment decisions in both the short and long term. This makes it one of our best Canadian dividend aristocrats (we # Ve has learnt to love puns) and is currently trading at a dividend yield of 4.5%.
If you look at your dividend portfolio, you will find that you own a lot of Canadian dividend stocks. If you try to hold as many of them, it could be because of the exchange rate. Don’t get me wrong; some utilities are generating growth, mainly renewable and green energy companies in Canada.
I see Atco Ltd and Canadian Utilities Ltd as two of the top dividend stocks in Canada, and they have enjoyed good consistent dividend growth over the last decade. Hares says: “The highest dividend-paying stocks have a long-term track record of solid development and consistent dividend growth.
As I mentioned earlier, financial, gold, and energy stocks were among the best Canadian stocks to buy in 2020. If you don’t have a high tolerance for risk, investing in Canada’s banking and oil and gas industries is Canada’s good dividend stock and will prove a solid investment into the 2020s. Since Canada’s five largest banks have paid dividends continuously since the nineteenth century, it makes sense to invest in Canadian banks, which will continue to pay hefty dividends regardless of market conditions.