Macroeconomic concerns are back to haunt investors in 2023. Despite the TSX Composite Index rallying by well more than 3% in the first quarter this year, it currently trades with 1.3% year-to-date losses at 19,138. According to its latest economic projections, the U.S. Federal Reserve now expects inflation and interest rates to remain elevated for a slightly longer period than earlier expected. Considering that, inflation may continue to steal high-growth companies’ profits in the coming years as well. This is one of the key reasons why we have seen a big selloff in growth stocks lately, especially from the tech sector.
To minimize your risks in such a volatile economic environment, you may want to add some safe utility stocks to your portfolio right now to expect steady returns on your investments in the long run. Let’s take a closer look at two top dividend-yielding Canadian utility stocks you can buy on the TSX today.
AltaGas stock
AltaGas (TSX: ALA) is a Calgary-headquartered infrastructure company that primarily focuses on connecting natural gas and natural gas liquids markets to consumers. It currently has a market cap of $7.3 billion, as its stock trades at $25.98 per share after gaining 14% in value in the last six months, outperforming the broader market by a wide margin. By comparison, the main TSX benchmark has seen 5.1% value erosion during the same six-month period.
Although AltaGas’s financial growth has been affected by several negative factors, including wildfire, negative hedge, and ship timing impacts, so far this year, its long-term financial growth trend still looks impressive. In the five years between 2017 and 2022, the company’s total revenue jumped by a solid 451%. Despite facing global pandemic-driven challenges, its adjusted annual earnings rose 57% during the same five-year period.
In August, AltaGas announced its intentions to acquire Tidewater Midstream & Infrastructure’s natural gas assets in a deal worth $650 million. With this deal, AltaGas aims to expand its long-life, low-risk natural gas infrastructure asset base, which should boost its financial growth further in the coming years.
Besides these positive factors, its decent 4.4% annualized dividend yield also makes this Canadian utility stock worth considering for income investors.
Hydro One stock
Hydro One (TSX: H) could be another attractive utility stock to buy on the TSX today. This Toronto-headquartered company mainly focuses on electricity transmission and distribution in Ontario. After rallying by nearly 80% in the previous four years combined, this utility stock currently trades at $34.77 per share with about 4% year-to-date losses. H stock has a market cap of $ 20.8 billion at this market price and offers a decent 3.5% annualized dividend yield.
The strength of Hydro One’s business model could be understood by the fact that it’s managing to maintain positive earnings growth even amid the ongoing difficult macroeconomic environment. In the second quarter of 2023, its revenue witnessed a minor 1% year-over-year gain. Also, its adjusted quarterly earnings rose 4.8% from a year ago to $0.44 per share, beating Street analysts’ expectations.
Moreover, Hydro One’s large electric utilities network, focus on maintaining a strong balance sheet, and largely predictable cash flows make this TSX utility stock really attractive to buy today and hold for the long term.
