Utilities is one of the largest constituents of the defensive stocks basket. These stocks often sought after and included in equities portfolios as they are likely to reel in stable returns over long periods of time.
Let us now look at some TSX-listed utilities stocks that have track record of notable returns.
Boralex Inc. (TSX:BLX)
Boralex is one of the top performing independent power producers in Canada. Its operations include the development, construction and operation of renewable energy facilities in Canada, France and the US. It harnesses wind, hydropower, thermal, and solar energy sources to produce electricity. Most of its revenues flow in from its wind and hydroelectric power generation operations.
The company is also known for its environmental, social and governance norms-compliant practices, which contribute significantly to Canada and France’s total power production.
With a market cap of nearly C$ 4 billion, it plans to increase its investments in assets and broaden its project portfolio for solar energy by 2025. It also looks to position itself as a major renewable energy company in the US.
It reported a four per cent year-over-year (YoY) decline in its wind energy production in the first quarter ending March 31, 2021. On the other hand, it added about 1,430 MW capacity in new solar power projects and 37 MW in wind power projects in the first quarter.
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Brookfield Infrastructure Corporation (TSX:BIPC)
The regulated utilities company operates through its investments in Brazil and the United Kingdom. It also handles transport, energy and data infrastructure operations apart from utilities, in the US, Europe, and Asia Pacific. While its maximum revenues flow from its regulated gas transmission business, its Brazil operations have so far been the most profitable.
In the quarter that ended on March 31, 2021, the utilities company’s net income reached US$ 190 million, as against US$ 119 million in the year-ago period. Its revenue from operations surged about 20 per cent higher YoY to US$ 431 million in Q1 2021.
The C$ 4-billion market cap company said that the favorable commodity markets, and gains from recently completed acquisitions, helped the company earn robust profits during the latest quarter.
Brookfield Infrastructure’s stocks outperformed the broader markets as it rose 8.75 per cent year-to-date (YTD), while the TSE 300 Composite Index declined 5.21 per cent during this period.
TransAlta Renewables Inc. (TSX:RNW)
The C$ 5.3-billion market cap company is an independent power generation and transmission player. Its business segments include wind, hydroelectric, and gas. TransAlta has some wind and solar facilities in the US and Australia.
The utilities player pays monthly dividends of C$ 0.078, with a dividend yield of 4.672 per cent at the moment. Its current price-to-earnings (P/E) ratio is at 38.70, while its price-to-book (P/B) ratio is 2.506. Its price-to-cash flow ratio (P/CF) is 18.60, as per TMX.
TransAlta Renewables’ stock grew 38.28 percent in the last one year, outrunning the TSE 300 Composite Index that climbed 7.03 per cent during this period.
TransAlta acquired assets with a cumulative capacity of 303 MW, of which, it acquired 274 MW wind capacity in Q1, 2021.
Its net earnings in the first quarter were at C$ 52 million, as against C$ 3 million in Q1 2020.
Capital Power Corporation (TSX:CPX)
Capital Power Corporation owns a generation portfolio of natural gas, coal, wind, solar, and solid fuel energy units for electricity generation. The Alberta-based company has operations in US, apart from Canada. It sells electricity and natural gas to industrial and commercial customers, government-owned entities, etc.
Capital Power’s market capitalization stands at C$ 4.7 billion. With about 115 million outstanding shares, its share price closed at C$ 41.4 on June 18, 2021.
Capital Power stock rose about 46 per cent in the last year, and is presently ranked among the top performing utilities companies on the Toronto Stock Exchange (TSX).
Capital Power generated net operating cash flows of C$ 206 million in Q1 2021, as against C$ 103 million in Q1 2020. Its net income was C$ 101 million in the latest quarter, while its total revenues were C$ 554 million.
Fortis Inc. (TSX:FTS)
Fortis Inc. is a regulated utilities company based out of Newfoundland, Canada. Its growth has been largely resilient in the last five years barring periods of dip in early 2020. It has utility transmission and distribution assets, which offer services in US and Canada.
The company, with its C$ 26.5 billion market cap, is one of the top performers in the utilities sector on the TSX. It distributes a quarterly dividend of C$ 0.505, and has a 3.571 per cent dividend yield at the moment.
Fortis has a P/E ratio of 21 and C$ 2.69 earnings per share (EPS), driven by increased rate base and higher earnings in Arizona operations. Its P/B ratio is 1.548, while its P/CF ratio is 9.30. Fortis stock also offers a 7.30 per cent return on equity (ROE).
Fortis is one of the most actively traded utilities stocks on TSX, with a 30-day average trading volume of 1.5 million shares.
It earned C$ 355 million as net earnings in the first quarter of 2021, up nearly 12 per cent YoY.
The above constitutes a preliminary view and any interest in stocks should be evaluated further from investment point of view.