When it comes to investing for the long haul and growing your hard-earned capital, one of the most important factors that you canât overlook is ensuring that your investments are well diversified. With that being said, though, there are some stocks that are essential for basically every investor to own, such as high-quality Canadian utility stocks.
© Provided by The Motley Fool
bulb idea thinking
Utility stocks are some of the best and most important businesses to own for the long haul, because they are low-risk businesses that provide excellent passive income that is not only reliable but also consistently growing.
Furthermore, utility stocks are some of the lowest-volatility investments that you can buy on the stock market, which can help protect and grow your hard-earned capital over the long run.
Many Canadian utility stocks are Dividend Aristocrats, and some of the oldest Dividend Aristocrats in Canada, including three of the five companies with the longest streaks, are businesses in the utility space.
The reason why these businesses are so reliable is that the services they provide are essential. In addition, these stocks are highly regulated by governments, which makes their forward revenue and earnings highly predictable, helping to lower the risk of the investment considerably.
So, if youâre looking to shore up your portfolio in this market environment or are just looking for high-quality, long-term stocks to buy and hold with confidence, here are two of the best Canadian utility stocks to buy now.
A top Canadian utility stock with 49 consecutive years of dividend increases
If you’re looking to add some of the best and most reliable Canadian utility stocks to your portfolio, there’s no better stock to start with than Fortis (TSX:FTS).
Fortis has the second-longest dividend-growth streak in Canada at an unbelievable 49 consecutive years. The stock is constantly increasing its dividend and today offers investors a yield of just under 4%. Furthermore, over just the last five years, that dividend has been increased by 33%.
Therefore, not only can you buy the stock and lock in an attractive 4% yield while owning a highly reliable and low-volatility investment, but you can also expect the passive income that Fortis generates to constantly increase, which is why the utility stock is such an incredible investment for Canadians.
The reason Fortis is so reliable is that in addition to offering both gas and electric utility services, both of which are essential and highly defensive, its operations are spread out across numerous jurisdictions, which helps to lower risk even more.
Plus, with the stock in the midst of a years-long capital program, where it expects its rate base to grow at a compound annual growth rate of 6% through 2027, there continues to be a tonne of long-term potential for the largest and most diversified utility stock in Canada.
Therefore, if you’re looking for top Canadian utility stocks to add to your portfolio, Fortis is certainly one of the best to consider.
A top utility business offering investors a 5% dividend yield
In addition to Fortis, another high-quality Canadian utility stock to consider today, especially if you’re looking for a higher yield is Emera (TSX:EMA).
Emera is another excellent and highly reliable business, just like Fortis. And while its dividend-growth streak is much shorter than Fortis’s at just 16 years, that’s still an impressive streak and shows what a reliable and consistent business Emera is.
Plus, while the dividend streak isn’t nearly as long, Fortis offers investors a much higher yield, which currently stands at roughly 5%. And, just like Fortis, over the last five years, the growth of the dividend has been impressive, up by approximately 22% over that stretch.
Furthermore, just like Fortis, Emera is well diversified with operations across six different countries in North America.
Therefore, if you’re looking to buy a high-quality stock that you can have confidence holding for years or just want a passive-income generator that consistently increases its payout to investors, Emera is a top utility stock that Canadian investors can add to their portfolios in the current uncertain market environment.
The post Powering Growth: Canadian Utility Stocks to Light Up Your Investments appeared first on The Motley Fool Canada.
Before you consider Emera, you’ll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in May 2023… and Emera wasn’t on the list.
The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 23 percentage points. And right now, they think there are 5 stocks that are better buys.
* Returns as of 5/24/23
More reading
Fool contributor Daniel Da Costa has no position in any of the stocks mentioned. The Motley Fool recommends Emera and Fortis. The Motley Fool has a disclosure policy.