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Highlights:
The utility sector is generally considered a safer segment by some investors, as compared to other growth sectors. Investors typically explore opportunities in the segment, especially during a volatile trading scenario.
Most utility firms generate contracted or regulated streams of income, making them attractive to investors. The companies provide basic services like electricity, water, etc., to consumers.
Having said that, the demand for their services tends to remain stable even during economic turmoil. In addition, there are many utility firms, which pay out a dividend to investors, although there is no specific rule for that.
Today, we would be exploring two utility stocks, which include Northland Power Inc. (TSX: NPI) and Hydro One Limited (TSX: H) and their recent performances:
Northland Power Inc. (TSX:NPI)
The clean and green power-producing firm, Northland Power Inc holds a dividend yield of 3.182 per cent. The stock of the utility firm, which owns and operates power infrastructure assets in Asia, Europe, and other regions, traded flat both on a year-to-date and year-over-year basis.
Northland Power Inc's sales rose to C$ 556 million in Q3 FY22 from C$ 432 in Q3 FY21, while its net income surged to C$ 76 million from a loss of C$ 5 million in the year-ago period.
For fiscal 2022, the Canadian utility firm expects its adjusted EBITDA to be between C$ 1.25 billion and C$ 1.35 billion.
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Hydro One Limited (TSX:H)
The electric power distribution utility firm, Hydro One Limited holds a dividend yield of 2.998 per cent. The stock of the company, which engages in the transmission and distribution of electricity, jumped over 13 per cent YTD and about 20 per cent YoY.
The H stock added over 10 per cent QTD and was at its 52-week high of US$ 38.27 on December 6, 2022. In Q3 FY22, Hydro One Limited's diluted EPS was C$ 0.51 per share on revenue of C$ 2.03 billion, against an income of C$ 0.50 apiece on revenue of C$ 1.91 billion in Q3 FY21.
Bottom line:
Since investment in utility stocks is exciting compared to other growth segments, several investors explore opportunities in the segment, who are looking to build a safer portfolio.
In addition, the recent hovering uncertainties over the market have also dragged down the prices of several stocks, making them available to many small investors. The S&P/TSX Capped Utilities Index fell over 10 per cent YTD and around four per cent QTD.
Considering the recent volatile performance of the overall market, investors should do thorough research before making any investment plans.
Please note, the above content constitutes a very preliminary observation based on the industry and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
