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Investors seeking reliable long-term returns often turn to top Canadian utility stocks, especially during periods of economic uncertainty or changing interest rates. Utilities, which provide essential products and services, can offer stable performance throughout economic cycles. Two notable TSX utility stocks worth considering are Fortis Inc. (TSX:FTS) and Brookfield Renewable Partners L.P. (TSX:BEP.UN).
Fortis Inc. (TSX:FTS):
Fortis is a leading North American regulated utility with diversified assets primarily in Canada and the United States. It operates 10 regulated utilities, with 93% of assets allocated to transmission and distribution, ensuring essential services throughout economic cycles. The utility boasts an impressive 50-year dividend growth streak, reflecting its resilience and commitment to shareholder returns.
Fortis has outlined a $25 billion capital plan for 2023 to 2028, expecting to drive a rate base growth of approximately 6.3% per year across its regulated utilities. With a low-risk capital plan, including 18% dedicated to major investment projects, Fortis provides stability and growth potential. The stock offers a dividend yield of 4.4% and aims for dividend growth of 4–6% per year through 2028. Despite a higher interest rate environment, Fortis appears fairly valued, with a price-to-earnings ratio of about 17.5.
Brookfield Renewable Partners L.P. (TSX:BEP.UN):
Brookfield Renewable Partners is well-positioned to thrive in a rising interest rate environment, boasting no near-term debt maturities and 98% long-term, fixed-rate debt for predictable interest expenses. With a strong financial position and available liquidity of approximately US$4.4 billion, BEP.UN maintains a BBB+ investment-grade balance sheet.
As a global renewable power and decarbonization solutions company, BEP.UN operates in key technologies, including hydroelectric, wind, solar, and distributed energy. The utility has demonstrated a decade-long track record of growth, achieving funds from operations per unit growth of over 10% per year. Management projects continued growth through 2028, targeting 5–9% distribution growth and 12–15% total returns. BEP.UN is currently fairly valued, trading at $35.88 per unit, with a cash distribution yield of 5%.
Both Fortis and Brookfield Renewable Partners offer investors opportunities for long-term total returns, making them attractive options for a well-rounded utility stock portfolio.
