Dividend Investors: Top Canadian Utility Stocks for September 2023

Here are two of the best dividend-paying Canadian utility stocks you can buy at a bargain in September 2023.

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The Canadian stock market remains turbulent in 2023 with a continued roller coaster of the main TSX index, despite the gradually slowing pace of interest rate hikes. While early signs of easing inflation should ideally comfort investors and encourage them to buy stocks, investors still worry that high interest rates may continue to affect the economic outlook, which could potentially lead to a worse-than-expected recessionary phase.

In such uncertain times, investing your hard-earned money in some quality Canadian utility stocks could be a good idea. This is because many well-established utility businesses largely remain unaffected by short-term economic downturns and help their investors keep getting a steady return on their investments. Besides that, most utility companies also reward their investors with quality dividends, even in difficult economic times.

In this article, I’ll talk about two of the best Canadian utility stocks on the Toronto Stock Exchange that you can buy at a bargain in September 2023.

Northland Power stock

Northland Power (TSX:NPI) is a Toronto-headquartered power producer that primarily focuses on utilizing renewable resources to generate power, with offshore wind being its largest segment based on its latest yearly revenue figures.

After consistently sliding for three consecutive months, NPI stock remained mixed in August and ended the month with a minor 0.2% gain at $25.55 per share and $6.5 billion in market cap. At this market price, Northland offers a decent 4.7% annualized dividend yield and distributes its dividend payouts every month.

On August 10, Northland Power announced its second-quarter results. In the June quarter, its revenue slid 15.3% YoY (year over year) to $471.6 million, as a decline in its wind resource across all offshore wind facilities affected its electricity production. Besides that, other negative factors like foreign exchange headwinds and increased costs drove its quarterly adjusted net profit down significantly from a year ago to $4.4 million, missing analysts’ estimates.

Despite the ongoing challenges, I find NPI stock attractive to buy on the dip, as the company continues to work on several new power projects globally that can help it improve its financial growth in the long run.

Superior Plus stock

Superior Plus (TSX:SPB) could be another attractive, dividend-paying Canadian utility stock to consider in September 2023. This Toronto-based propane and distillates distributor currently has a market cap of $2.5 billion, as its stock trades at $10.21 per share with about 9% losses in 2023. At this market price, SPB has a very attractive 7.1% dividend yield and distributes its dividend payouts on a quarterly basis.

In the second quarter of 2023, Superior’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) climbed by $43.4 million year over year with the help of improved performance of its propane distribution business and the positive contribution from recently acquired Certarus.

These strong results encouraged the management to raise its full-year pro forma adjusted EBITDA guidance, boosting investors’ confidence. This is one of the key reasons why SPB’s share prices rose 3.3% in August, despite the broader market weakness. Considering Superior’s strong long-term fundamentals with its increasing focus on low-carbon energy solutions, this Canadian dividend stock looks attractive to buy for years to come, especially when it’s down 9% on a year-to-date basis.

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.

The Motley Fool recommends Superior Plus. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

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