Have $1,000? 2 All-Weather Dividend Stocks to Buy and Hold Forever

Fortis and Canadian Utilities are two recession-resistant stocks. These companies also have an enviable history of dividend payments.

| More on:
money cash dividends

Image source: Getty Images

Utility stocks are viewed as stable investments because demand for these services, including electricity, water, and natural gas distribution, remains steady across market cycles. The rates charged by utility companies for their services are either regulated (approved by governments) or backed by long-term contracts, resulting in predictable earnings.

A steady earnings base also allows utility stocks to pay investors a dividend with generous yields. An enviable combination of reliable profits and consistent earnings expansion positions utility stocks as top bets for investors with a lower risk profile.

I’ve identified two TSX utility stocks that income-seeking investors can buy and hold forever.

Canadian Utilities

A globally diversified company, Canadian Utilities (TSX:CU) offers solutions in utilities, retail energy, and energy infrastructure. With an asset base of $21.1 billion, the company generated $3.5 billion in revenue and $586 million in adjusted earnings in 2021. It also spent $1.2 billion in capital expenditures which expanded its base of cash-generating assets.

CU has the longest track record of annual dividend increases among Canadian publicly traded companies. It has increased dividends for 50 consecutive years, showcasing a resilient business model.

Investors are paid annual dividends of $1.78 per share, indicating an attractive forward yield of 4.4%. In 1992, Canadian Utilities paid investors annual dividends of $0.35 per share, increasing payouts by 5.6% annually over the last 30 years. Since September 1992, Canadian Utilities has returned 587% to investors. After adjusting for dividends, total returns are closer to 1,900%.

The utility giant has grown its rate base to $14.5 billion. Between 2022 and 2024, it expects to invest $3.5 billion in regulated utility and commercially secured energy infrastructure projects.

In Q2, Canadian Utilities invested $294 million in capital expenditure, of which 93% was allocated towards regulated utilities and the rest to energy infrastructure.

Fortis Inc.

Another Canadian utility heavyweight, Fortis (TSX:FTS)(NYSE:FTS) has increased its assets from $390 million in 1987 to over $60 billion in 2021. Its affiliate companies include ten electric and gas operators that serve three million customers in North America.

Fortis has increased dividends for 48 consecutive years and currently offers investors an attractive forward yield of 3.64%. Its dividends increased from $1.20 per share in 2012 to $2.05 per share in 2021. Fortis also aims to increase dividends by 6% through 2025.

Fortis has allocated $4 billion towards capital expenditures in 2022 and spent $1.9 billion in the first two quarters of this year. In July, the Midwest Independent System Operator (MISO) board approved the first tranche of projects associated with a long-range transmission plan. Total associated costs for the project are estimated at US$10 billion, and Fortis has allocated around $20 billion towards Capex in the next five years.

The Foolish takeaway

Canadian Utilities and Fortis are blue-chip Canadian stocks with a recession-resistant business model. The stable, growing dividend yields and low beta associated with these utility stalwarts make them attractive bets for income-seeking investors.

An investment of $5,000 in each of these two stocks allows investors to generate $400 in annual dividend payments. These payouts should keep increasing each year due to earnings expansion and the companies’ stellar dividend growth histories.

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 Aditya Raghunath has positions in FORTIS INC. The Motley Fool recommends FORTIS INC.

More on Dividend Stocks

thinking
Dividend Stocks

Should You Buy BCE Stock for its 8.6% Dividend Yield?

Down over 20% from all-time highs, BCE stock offers you a tasty dividend yield in 2024. But is the TSX…

Read more »

grow dividends
Dividend Stocks

How Long Would It Take to Turn $20,000 Into $100,000 With TSX Dividend Stocks?

Here's how high-quality TSX dividend stocks and the power of compound interest can help grow your investments by 400% or…

Read more »

Paper airplanes flying on blue sky with form of growing graph
Dividend Stocks

2 Soaring Stocks I’d Buy Now With No Hesitation

These two stocks may be the most expensive on the market, but they're high for a reason! And I'm still…

Read more »

Hour glass and calendar concept for time slipping away for important appointment date, schedule and deadline
Dividend Stocks

Invest $374.50 Each Month to Create Passive Income of $288 in 2024

Investing a specific amount each month to create passive income this year is possible with monthly dividend payers.

Read more »

Happy retirement
Dividend Stocks

2 Stocks to Help Turn $100,000 Into $1 Million

If you want to reach $1 million, $100,000 can certainly get you there. Even if you invest in some low…

Read more »

warning or alert
Dividend Stocks

Income Alert: These Stocks Just Raised Their Dividends

There's no shortage of companies that raised their dividends recently. Here's a trio of options to consider buying now.

Read more »

Business success with growing, rising charts and businessman in background
Dividend Stocks

Don’t Look Now, But These 3 TSX Stocks Look Poised for a Nice Rally 

Three TSX stocks are in a downtrend amid headwinds. 2024 may be rocky for them, but they are poised for…

Read more »

protect, safe, trust
Dividend Stocks

3 Safe Dividend Stocks to Beat Inflation

These three dividend stocks are excellent buys to beat inflation, given their solid underlying businesses and high yields.

Read more »