When it comes to finding the perfect stocks for dividend investors, Canadians have long been going to utility stocks. In fact, for about 50 years or more! That’s because it’s two utility stocks that hold the only spots among the Dividend Aristocrats as Dividend Kings! That means these companies have been increasing their dividends each year for the last 50 years.
And it’s why today we’re going to focus on these utility stocks for Canadian investors. After all, if you’re looking for passive income in 2024, these are the best options. Yet they could be even better, thanks to the potential for large returns as well. So, let’s get right to it.
The best growth option
For those seeking the best option for growth in terms of returns, I would look to Hydro One (TSX:H). Hydro One stock is the baby of the batch, having only been on the market for the last few years. However, it could be one of the strongest options as it focuses its attention on hydropower.
Hydropower will remain and expand as a strong option as renewable energy continues to expand. Yet it’s the top production method of Hydro One stock, which supports the largest portion of Ontario in terms of utilities.
Yet it’s one of the utility stocks offering a great deal on the TSX today. Shares offer a 3.03% dividend yield, with shares up 7% year to date as of writing and up 19% after falling to October lows. So, I would certainly consider this company as it continues to roar back for safe and stable future income and growth.
The OG
The original Dividend King, Canadian Utilities (TSX:CU) stock also offers some superb returns in the near future. And ones that you’re not likely to see again for quite some time. Even in the next decade. Shares of CU stock climbed at the beginning of the downturn but have since fallen back after crashing in the early days of the fall in the markets.
Now, it offers huge returns and dividends for investors. CU stock has proven time and again that it can expand and grow organically and through acquisitions, expanding its utility business across North America. Yet now shares trade at just 14.45 times earnings, offering a huge deal for today’s investor.
CU stock also offers up a dividend yield of a whopping 5.66% as of writing. That’s far higher than its five-year average dividend yield of 4.91%. So, I would lock this up while you still can and see future returns climb back. Shares may be down 14% year to date but have already risen 11% in the last two months.
Number two
For years, CU stock was the only Dividend King on the market, but another took second place recently. Fortis (TSX:FTS) could offer even more growth in dividends and returns from these utility stocks. The company has been quite active in growing organically and through acquisitions, putting everything it can towards more growth and more dividends in the meantime.
Yet again, shares fell in the last two years, as did the other utility stocks. The company now offers a 4.3% dividend yield, trading at a reasonably valued 17.58 times earnings. Plus, shares have been more stable for Fortis stock, trading where they were at the beginning of 2023.
That being said, there is a bit more to climb back to 52-week highs. Plus, shares are already up 8% in the last two months alone. So, with a solid 73% payout ratio and its dividend yield far higher than its five-year average of 3.65%, it’s another of the utility stocks I’d pick up today.
