Dividend Investors: Top Canadian Utility Stocks for November 2023

Utility stocks have been touted as safe investments, but shares have dropped as of late. However, these two are already rebounding.

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It might be the end of November, but it has been a crazy month, to put it mildly. We entered well into a bear market, and now we could be exiting it! I mean nothing is for certain, and the market can turn on a dime. However, there are some positive numbers coming out pushing for a bull market to get here already.

With that in mind, it’s still a great time to get in on long-term protection. So that next time the market drops (and it will), you’ll be prepared. Luckily, there are stable stocks you can look for right now, and many are utility stocks.

Why utility stocks?

Utility stocks are great options for many reasons. For one, utility stocks offer stable cash flow. This comes from long-term contracts made not just with private industries, but with the government as well. These long-term contracts mean you don’t have to worry about the ebb and flow that you get with other companies. Instead, it’s rock solid.

The main drop we’ve seen lately comes from two sources. First, investors flooded utility stocks for protection. Then, when the market dropped, they took out their cash because they needed it. Utility stocks then fell in response.

The market still hasn’t seen these stocks climb back up, and that’s due to the foreign exchange currency and interest rates hurting bottom lines. Even so, these are short-term issues. Ones already improving as we speak.

Dividend Kings

In fact, while the market may ebb and flow, there are two dividend stocks that remain strong. So strong that they’ve increased their dividend each year for the last 50 years. They are Canadian Utilities (TSX:CU) and Fortis (TSX:FTS).

Canadian Utilities stock is the original Dividend King of the two. And, in fact, it has been doing well even during the poor trading environment. The company continues to climb past earnings estimates, with that only continuing in the year to come.

It now trades at just 14.1 times earnings, offering up a 5.81% dividend yield to investors. Shares remain down by 15% in the last year, trading at 2.1 times sales, and 10 enterprise value over earnings before interest, taxes, depreciation and amortization (EV/EBITDA). So, it has value all sewn up.

Getting good

Fortis stock recently also became a Dividend King as of this month. The company has other reasons to consider it as well, however. In fact, the company has performed better than Canadian Utilities stock in terms of its earnings reports. It has beat out estimates, and seen earnings per share rise higher in recent months.

Meanwhile, shares trade at a fairly valued 18.2 times earnings, up 5% in the last year. That’s solid performance, but not so much growth that investors should expect slower growth in the future. In fact, there could be a boost as investors look to utility stocks once more.

Finally, the dividend yield is at 4.2% as of writing. That’s a fair bit more than the average over the last five years at 3.64%. And with the value of EV/EBITDA at 11.6, trading at 2.3 times sales, it’s another stock that only has more room to grow.

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. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.

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