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In a broader sense, markets are likely to be volatile across 2021 amid the economic recovery. This is the most opportune time for investors to consider utility stocks during these uncertainty-filled market movements.
Why Utility stocks?
It is no rocket science that utility stocks grow even during times of economic depression, as we saw in 2020. If a power distribution company suffers badly then we experience interrupted power supplies that directly affect the production of goods and rendering of essential services.
As a slow-moving stock, paying regular dividends, utility benefits a large section of investors in this kind of market.
Let us take a look at five such dividend-paying utility stocks with an optimistic outlook.
Fortis (TSX:FTS)
The very fact that this top utility stock has appreciated by more than 5 per cent in the last one month speaks volumes about signs of Canadian economic recovery.
As a leading utility company engaged in power generation, electricity transmission, and distribution across North America, you should be mindful of the fact that the US accounts for 60 per cent of its business and the remaining 40 per cent is accounted for by Canada.
For the year 2020, the company saw an increase in net earnings by more than US$1.3 billion, which the utility giant attributes to the increase in the sale of retail electricity.
(Source: Pixabay)
Algonquin Power and Utilities (TSX:AQN)
This solid dividend earnings talk is an excellent choice if you are up for the long-term growth of wealth. Operating across North America, Algonquin provides important utility services like power generation, transmission, and distribution.
The stock grew by nearly ~17 per cent in the last nine months.
The 2020 full financial year revenue show an increase of three per cent and was recorded as US$1.6 billion.
The utility company intends to boost the capital expenditure by US$9.4 billion from 2021 throughout 2025 as a plan to generate growth and earnings.
And given the three-year dividend growth of 9.25 per cent, this utility stock is a must grab.
The stock’s gross dividend yield is 7.5 per cent.
Capital Power Corporation (TSX:CPX)
If passive income is your primary consideration, you would like to have Capital Power in your portfolio. Having its operations mostly spread over Western and Central Canada and the US, Capital Power operates a portfolio of power generating facilities running on both conventional and renewable energy such as wind and solar.
With a dividend yield of more than 5.5 per cent, Capital power has given a return of 32 per cent consistently in the last one year.
The icing on the cake is that capital power has been named as one of the world's Most Ethical Companies® for 2021 for three straight years by the Ethisphere Institute. It is one of the nine energy and utility companies, worldwide that has been conferred this honor.
Northland Power Inc. (TSX:NPI)
The world is moving towards cleaner energy sources and by owning the stock of Northland power you can be a major contributor to the climate change efforts.
Northland Power, as a matter of policy, focuses on providing its shareholders a sustainable dividend growth with a monthly frequency that already has a three-yearly growth of 5.62 per cent. The current gross dividend yield is 2.5 per cent.
The company's financial reports indicate an annual net income of four C$85.1 million for the year 2020, which is an increase of 7 per cent over 2019.
The company has completed the acquisition of Baltic power, a Polish offshore wind project.
The stock grew by nearly 60 per cent in the last one year.
