3 Utility Stocks to Protect You During a Recession

If you’re looking for recession protection, Algonquin Power & Utilities Corp. (TSX:AQN)(NYSE:AQN) and these other two utility stocks offer it up in spades.

| More on:
HIGH VOLTAGE ELECRICITY TOWERS

Image source: Getty Images

It would be hard to come up with any other industry that can protect you better than the utilities industry during a market downturn, and especially during a recession.

This area remains a must-have even during the worst conditions, as people always need to keep the lights on and their houses heated or cooled. That fact has left a number of larger companies expanding while other areas of the market are forced to buckle down.

So today I’m going to look at three great options that should see you through this recession, and well into the future.

Algonquin

Not only is Algonquin Power & Utilities Corp. (TSX:AQN)(NYSE:AQN) doing well, but shares of the company recently hit 52-week highs despite heading toward a recession. What investors like about Algonquin is its focus on renewable energy and regulated utilities.

While utilities offer stable income, renewable energy is the future, giving investors hope that this company could indeed explode in the next decade or so.

Another bonus investors should consider is Algonquin’s dividend of 4.19% as of writing, which has seen steady growth over the past several years. Given the industries it’s involved in, that dividend should continue to grow for the foreseeable future, making it a perfect investment for those looking to get some extra cash even during a market downturn.

Fortis

A no-brainer option, Fortis Inc. (TSX:FTS)(NYSE:FTS) has been touted a lot lately for its stable status within the utilities industry. In fact, Fortis is also experiencing a period of growth right now, both in share price and in the company itself.

The company already operates in Canada, the United States, Central America and the Caribbean right now, but Fortis is looking to expand its U.S. presence even further via acquisition as of late.

Yet again we also have a stable and strong dividend that has been increased repeatedly over the years, with Fortis boasting a 3.45% dividend yield at the moment.

Like Algonquin, it’s also near 52-week highs, but don’t let that scare you. If a dip happens, it won’t be for long, so it’s better to buy up this stock and watch it rise for the next few decades.

Canadian Utilities

Finally, we have Canadian Utilities Ltd. (TSX:CU), a company that should see a boost when its earnings results are released next month. Again, shares are trading near 52-week highs, but Canadian Utilities looks like it’ll only continue to grow, and in fact could make an excellent buy-and-hold option for your retirement portfolio.

That’s because the company is a mixture of both electric utilities, and natural gas utilities. Each of these industries brings in about $600 million per year in annual earnings from locations across North America and Australia.

Beyond its already existing infrastructure, Canadian Utilities is also in growth mode, with $1.2 billion each year in planned spending for its growth program set to be completed by 2o21.

These projects coupled with the company’s recent sales should bring in a mass amount of cash to make more acquisitions, which makes Canadian Utilities a great choice to see you through a recession, with strong near-term gains on the other side.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned.

More on Investing

money cash dividends
Stocks for Beginners

Where to Invest $10,000 in April 2024

If you've already created a diversified portfolio and are looking for more options from a windfall, here is where I…

Read more »

data analyze research
Investing

The Ultimate TSX Stock to Buy With $1,000 Right Now

Brookfield Asset Management (TSX:BAM) is one of the best Canadian stocks to buy for those looking to put capital to…

Read more »

young woman celebrating a victory while working with mobile phone in the office
Dividend Stocks

3 CRA Benefits Most Canadians Can Grab in 2024

You can save on taxes by claiming the dividend tax credit on Fortis Inc (TSX:FTS) shares.

Read more »

A cannabis plant grows.
Cannabis Stocks

Canopy Growth Stock Is Rising But I’m Worried About This One Thing

Canopy Growth stock is soaring as the legalization effort makes real progress in both Germany and the United States.

Read more »

young woman celebrating a victory while working with mobile phone in the office
Investing

3 Roaring Stocks to Hold for the Next 20 Years

These top TSX stocks are excellent long-term buys, given their multi-year growth potential and solid underlying businesses.

Read more »

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

grow dividends
Investing

Here’s My Top 3 TSX Stocks to Buy Right Now

Even though the TSX has been rising, there are still some good bargains out there. Here are three top compounding…

Read more »

Target. Stand out from the crowd
Investing

Prediction: This Canadian Growth Stock Could Double by 2030

Alimentation Couche-Tard (TSX:ATD) is a top growth stock that could do well over the next six or so years.

Read more »