Is Hydro One Stock a Buy After its Q4 Earnings Event?

Here’s why Hydro One stock could be a great investment option for consecutive investors in February 2024.

| More on:
analyze data

Image source: Getty Images

Hydro One (TSX:H) has been one of the most attractive stocks in the Canadian stock market in the last few years, as it’s known for consistently yielding positive returns for investors. Notably, the TSX-listed H stock has nearly doubled investors’ money by delivering more than 95% positive returns over the last five years. By comparison, the TSX Composite benchmark has gone up by around 33% during this period.

If you don’t know it already, Hydro One is a Toronto-headquartered utility firm with a market cap of $24.2 billion. Its stock trades at $40.40 per share with nearly 1.8% year-to-date gains. The company mainly focuses on electricity transmission and distribution to customers within Ontario. The stock also offers a decent 3% annualized dividend yield at the current market price and distributes these payouts every quarter.

Earlier this week, on February 13, the company released its fourth-quarter and full-year 2023 results. Before discussing whether Hydro One stock is a buy now, let’s take a closer look at some key highlights from its latest earnings report.

Key highlights from Hydro One’s fourth-quarter earnings report

In the fourth quarter of 2023, Hydro One’s total revenue rose 6.3% from a year ago to about $1.98 billion with the help of higher demand and approved transmission rates. Its adjusted quarterly earnings remained flat on a YoY (year-over-year) basis at $0.30 per share but exceeded analysts’ expectations by a narrow margin. During the quarter, its operating, maintenance, and administration costs went up slightly, primarily due to environmental expenditure provisions.

Its revenue for the full year 2023 stood at $7.84 billion, up around 1% from the previous year. More importantly, its adjusted annual earnings rose 3.4% YoY to $1.81 per share.

Last year, Hydro One achieved $114 million in annual productivity savings, demonstrating its efficiency and focus on incentive rate-making. In addition, its capital investments and assets placed into the service saw significant YoY increases, which supports its ongoing expansion and reliability of Ontario’s electricity infrastructure.

Is Hydro One stock as buy now?

In the post-pandemic era, the stock market has been highly volatile due mainly to growing macroeconomic uncertainties and other geopolitical factors. Even in such uncertain times, Hydro One stock has consistently been yielding positive returns for five consecutive years, reflecting its ability to continue inching up even in adverse market conditions.

Besides its stable financial performance in recent years, Hydro One’s continued investment in critical infrastructure to meet growing demands and improve service reliability makes its stock look attractive to consider right now. H stock could be great to hold for the long term, especially for investors seeking stable returns, consistent dividends, and exposure to the utility sector’s defensive nature.

Its strategic investments and focus on operational efficiency could help its share prices continue rising in the years to come. However, if you’re looking to multiply your investments in a short period of time, Hydro One stock might not be the best choice for you, as it’s unlikely to deliver explosive growth in the near future. In my opinion, Hydro One stock is more suited for conservative investors who value stability and consistency over high risk and high reward.

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

More on Dividend Stocks

value for money
Dividend Stocks

Canadian Tire Is Paying $7 per Share in Dividends. Time to Buy the Stock?

With Canadian Tire trading ultra-cheap and offering a safe dividend yield of more than 5.5%, is it one of the…

Read more »

Payday ringed on a calendar
Dividend Stocks

Secure Your Future: Top 2 Monthly Dividend Stocks to Buy in 2024

Here are two top Canadian monthly dividend stocks you can buy today to minimize risks to your portfolio.

Read more »

woman data analyze
Dividend Stocks

Passive Income: How Much to Invest to Get $6,000 Each Year

Have you ever wondered how much to invest to get $6,000 in passive income? It's easier than you think, and…

Read more »

Dividend Stocks

A Dividend Giant I’d Buy Over Suncor Right Now

Suncor stock is a TSX energy giant that trades at a compelling valuation while paying shareholders a tasty dividend yield.…

Read more »

oil and natural gas
Dividend Stocks

3 No-Brainer Dividend Stocks to Buy Right Now for Less Than $200

These dividend stocks could continue to increase dividends and enhance shareholders’ returns.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

Here’s the Average CPP Benefit at Age 65 in 2024

Dividend stocks like Fortis Inc (TSX:FTS) can supplement the income you get from CPP.

Read more »

Airport and plane
Dividend Stocks

Is Air Canada a Buy, Hold, or Sell?

Air Canada (TSX:AC) stock is very cheap. Does that make it a buy?

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

Invest $100 Each Month to Create $260.79 in Passive Income in 2024

Investors who only have a bit to put aside should certainly consider this ETF. It offers you the passive income…

Read more »