Best 3 utility dividend stocks to buy & hold in 2021

Summary

  • Utility stocks are popular in Canada as the sector contributes significantly to the country’s economy .
  • The S&P/TSX Capped Utilities Index surged 1.4 per cent month-to-date.
  • Amid ongoing heatwaves, Canada’s energy consumption has increased, which, in turn, can impact utility stocks.

Utility stocks are popular in Canada as the sector contributes significantly to the country’s economy. Many investors explore utility stocks for their investment portfolios as they likely provide stable returns.

After a dip in May, it seems like the utility sector is gaining momentum in Canada amid the ongoing heatwaves. The S&P/TSX Capped Utilities Index has surged 1.4 per cent so far this month.

On that note, let us look at some utility stocks that pay dividends to their shareholders.

Capital Power Corporation (TSX: CPX)

Headquartered in Alberta, Capital Power Corporation owns and operates power generation facilities across North America.

As the company is committed to reducing greenhouse gases (GHG) emissions, it could receive some government subsidies in the future, which, in turn, would help it maximize its revenues.

As per the data available on the TMX, the utility player offers a return on equity (ROE) of 6.05 per cent.

It pays a quarterly dividend of C$ 0.512 per unit to its shareholders. Presently, CPX stock holds a dividend yield of 4.93 per cent. Its dividend grew at the rate of 6.16 per cent in the last three years.

At market close on Thursday, July 8, Capital Power Corporation shares were priced at C$ 41.61 per piece, a little less than its 52-week high of C$ 42.48 (recorded on June 24).

CPX stock grew by 19 per cent year-to-date (YTD) to beat the Toronto Stock Exchange 300 Composite Index's growth of 3.4 per cent in the same period.

Fortis Inc. (TSX: FTS)

Fortis Inc is said to serve more than 2.5 million electricity and gas customers in North America.

The diversified utility company posted robust first quarter results this year, with revenues amounting to C$ 2.54 billion, as compared to C$ 2.39 billion in Q1 2020. Its net income stood at C$ 355 million, reflecting an increase of about C$ 43 million year-over-year (YoY).

FTS stock climbed by about two per cent quarter-to-date (QTD) and by around 7.6 per cent in the last twelve months. The utility scrips were priced at C$ 55.89 apiece at closing on Thursday, July 8.

Shareholders of Fortis Inc. are paid a quarterly dividend of C$ 0.505 per piece. Its current dividend yield stands at 3.6 per cent and its debt-to-equity ratio is 1.5.

According to the data on TMX, Fortis is the largest utility company in Canada in terms of market capitalization, presently stands at C$ 26.3 billion.

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AltaGas Ltd. (TSX: ALA)

Operating in two business segments, utilities and midstream, AltaGas is one of the top utility companies in Canada.

ALA stock seems to be on an upward trajectory as it catapulted by 72 per cent in the past one year and soared by 39 per cent in the last six months.

On Wednesday, July 7, the utility stock scored a fresh 52-week high of C$ 26.58 per share. From there, the scrip dwindled a little to close at a value of C$ 26.46 on Thursday.

AltaGas offers a return on assets (ROA) of 1.8 per cent. It pays a monthly dividend of C$ 0.083 per piece.

The utility player’s average trading volume stood at 636,677 in the last ten days. Its price-to-book ratio stands at 1.21, as per TMX data.

The above constitutes a preliminary view and any interest in stocks should be evaluated further from investment point of view.

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