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.
