3 Canadian dividend utility stocks to buy at a low cost

Highlights

• One of the utility stocks listed here expanded by nearly 32 per cent in the past year.
• A utility company among them posted a dividend yield of 4.878 per cent.
• One of the below-mentioned stocks held a return on equity of 10.21 per cent.

Investors often prefer to invest in stocks like utilities to fetch stable returns in the long run. Utility companies are likely to survive a potential economic recession and shocks as utility services have inelastic demand despite bullish and bearish market situations.

However, Canadian utility stocks are under stress due to the fear of an increase in interest rates. This opens the door for investors who wish to invest their money in utility stocks at comparatively lower prices and earn a stable income through dividends and fetch good returns over the years.

Also read: Top 5 Canadian gold stocks to buy at low prices & hold long term

On that front, let us explore three utility stocks listed on the Toronto Stock Exchange (TSX).

1.    TransAlta Renewables Inc (TSX:RNW)

The electric utility firm TransAlta Renewables Inc noted its stock wrapping up trade at C$ 19.27 apiece, down by 2.578 per cent, on Monday, October 18. Its stock plummeted by more than 21 per cent from its 52-week high of C$ 24.47 on January 7.

TransAlta’s stock climbed nearly seven per cent in the past year, and it descended by more than 11 per cent on a year-to-date (YTD) basis. Its stock dipped by almost three per cent in the past month. However, it appears to be in the recovery phase as it increased by nearly two per cent in the last week.

The Calgary-based utility firm reported a year-over-year (YoY) reduction of C$ 18 million in its comparable EBITDA to C$ 97 million in the second quarter of 2021. In addition, it posted adjusted funds from operations (AFFO) of C$ 64 million and cash available for distribution (CAFD) of C$ 40 million for Q2 2021.

The C$ 5 billion market cap firm had a price-to-earnings (P/E) ratio of 38.50, a price-to-book (P/B) ratio of 2.426, a return on equity (ROE) of 6.66 per cent, a return on asset (ROA) of 4.05 per cent and a dividend yield of 4.878 per cent on Tuesday, October 19.

TransAlta is active in dividend pay-outs and is expected to pay a monthly dividend of C$ 0.078 per share to its shareholders on October 29.

2.    Polaris Infrastructure Inc (TSX:PIF)

The stock of renewable energy company Polaris Infrastructure Inc dropped by 1.463 per cent to C$ 18.18 apiece at the market close on October 18. At this closing price, it was down by roughly 26 per cent from its 52-week high of C$ 24.41 on February 8.

The stock expanded by nearly 32 per cent in the past year and noted a YTD growth of almost three per cent. Additionally, its stock surged by about five per cent in the last month and ascended by more than one per cent in the previous week.

The Toronto-based geothermal and hydroelectricity provider reported revenue of C$ 14.2 million from energy sales and net earnings of C$ 0.2 million attributable to owners for the second quarter of 2021.

Polaris held a P/E ratio of 9.10, a P/B ratio of 1.084, an ROE of 10.21 per cent, an ROA of 4.91 per cent and a dividend yield of 4.14 per cent at the time of writing. It also posted a five-year average annual dividend growth rate of 24.30 per cent.

Also read: 3 Canadian midcap stocks to buy this fall

3.    Innergex Renewable Energy Inc (TSX:INE)

The Quebec-headquartered energy producer Innergex Renewable Energy Inc saw its scrip closing at C$ 20.81, down by 1.14 per cent on Monday, October 18. At this price level, it was nearly 36 per cent below its 52-week high of C$ 32.48 on January 8 and marked an increase of more than 13 per cent from its 52-week low of C$ 18.37 reached on May 12.

Innergex’s stock tumbled by more than 21 per cent in the past year, and it descended by more than three per cent in the last month. However, it rose by about nine per cent in the past week.

Innergex Renewable Energy, in the second quarter of 2021, reported revenue of 0.17 million and net earnings of 0.05 million.

At the time of writing, it held a P/B ratio of 6.206, a price-to-cash flow (P/CF) ratio of 14.40, a debt-to-equity (D/E) ratio of 7.38 and a dividend yield of 3.46 per cent.

Bottom line

The above-mentioned utility stocks provide an opportunity for investors to invest their money in utility stocks which provide stable returns over the long term and fetch regular dividend income to its shareholders.

Also read: 3 TSX clean energy stocks to buy & hold for the long haul

However, before buying any utility stock, investors should go through the business, stock performance, financial results, and other such factors to ensure the company's financial strength to overcome any market resistance.