The Motley Fool

High Dividend Yield Utility Stocks: Where to Invest $1,000 Now?

Image source: Getty Images

Utility stocks are best known for their robust dividend payments. Thanks to the regulated nature of their business and long-term contractual arrangements, utility companies offer stellar dividends that continue to grow with each passing year and boosts shareholders’ returns. 

Besides dividends, utility companies generate predictable cash flows and are relatively stable, making them attractive investment amid uncertainty. So, if you are looking for a steady dividend income without risking your capital, consider buying these utility giants offering over a 5% dividend yield. 

Capital Power Corporation

Capital Power Corporation (TSX:CPX) is among Canada’s top utility companies offering a high dividend yield of over 6.7%. Capital Power owns a modern and diversified portfolio of power generating assets generating predictable and growing cash flows. Thanks to its highly contracted assets, the pandemic hardly had an impact on its cash flows. 

The company’s revenues jumped 27% in the first six months of 2020, while its adjusted EBITDA improved by 15%. Capital Power has increased its annual dividends for seven consecutive years, including the recent hike of 6.8%. The company expects its dividends to increase by 7% in 2021 and by 5% in 2022. 

The company’s recent acquisitions and continued progress on its annual capital for growth programs are likely to support its cash flows, in turn, its future payouts. 


With most of its revenues coming from the regulated assets, AltaGas (TSX:ALA) is another stock in the utility sector, offering a dividend yield of over 5%. To be precise, AltaGas stock currently offers an annual yield of 5.5%, with a monthly dividend payout. 

The company generates over 60% of its adjusted EBITDA from the regulated utility assets. Further, AltaGas forecasts an annual growth of 8-10% in its utility rate base till 2024, implying that its payouts are safe.

While its utility business generates stable cash flows, the midstream operations are growing at a brisk pace, reflecting higher export volumes and increased utilization rate. Investors should note that AltaGas runs a low-risk and a high growth business and offers a stellar dividend yield. If you are looking for both growth and income, keep AltaGas stock on your radar. 

Canadian Utilities 

Canadian Utilities (TSX:CU) should be on top of the buying list for every income-seeking investor. The company boasts of the longest track record of consistently increasing its dividends. For those who do not know, Canadian Utilities has raised its dividends for the past 48 consecutive years. 

The dividend king pays a quarterly dividend of $0.44 per share, reflecting an annual yield of over 5.1%. 

With about 95% of its earnings coming from the utility assets, its cash flows remain immune to the economic cycles. Moreover, it implies that its dividends are pretty safe.

Canadian Utilities continues to invest in the contracted and regulated assets, which should help the company to deliver high-quality earnings and support its future payouts. 

Final thoughts

Investors seeking high yield amid a lower interest rate environment should snap up these utility stocks. The dividends of all these companies are safe and could continue to increase in the coming years, thus boosting your overall returns. 

Speaking of solid returns...

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

Fool contributor Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool recommends ALTAGAS LTD.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.