If you’re looking for a dividend stock that’s just the simplest, easiest choice you could make, Canadian Utilities (TSX:CU) likely comes up again and again. The company is the first Dividend King the TSX today has ever had. It was the only option for a few years before another utility company joined its ranks.
But beyond its Dividend King status, what else does Canadian Utilities stock have to offer?
Stability
Stable business models provide investors with a sense of security, consistency, and potentially reliable returns over the long term. Stable businesses typically operate in industries where demand for their products or services remains relatively consistent over time. This predictability allows these companies to generate steady cash flows, which can be reassuring for investors.
Companies with stable business models tend to be less affected by economic downturns compared to companies in cyclical industries. This resilience can help them maintain profitability and financial stability during challenging economic conditions.
Canadian Utilities stock operates in regulated utility sectors such as electricity, natural gas, and pipelines. These are essential services that generate predictable cash flows regardless of economic conditions. As a result, the stock can afford to pay consistent dividends.
About that dividend
Many stable companies have a history of paying dividends, and they often prioritize maintaining or increasing these dividend payments over time. This can be attractive to income-focused investors who rely on regular dividend income. Canadian Utilities stock fits this perfectly.
Canadian Utilities stock has a tradition of increasing its dividend payouts over time. While the rate of increase may vary from year to year, the company’s commitment to growing dividends is evident in its historical performance.
Canadian Utilities typically offers a competitive dividend yield relative to other stocks in the market. The dividend yield represents the annual dividend payments as a percentage of the stock price. Investors often seek stocks with attractive dividend yields for income generation.
Long-term growth
Finally, Canadians seeking a no-brainer buy should certainly consider Canadian Utilities stock, as it’s already seen such long-term growth. What’s more, utilities offer exposure to an industry that will remain essential for decades to come.
While Canadian Utilities is primarily valued for its dividend income, it also offers the potential for long-term capital appreciation. As an established company with a diverse portfolio of assets, Canadian Utilities can benefit from infrastructure development, population growth, and energy demand trends over time.
And while stable businesses may not experience rapid growth rates like some high-growth companies, they often have sustainable long-term growth potential. They may gradually expand their market share, invest in new technologies or products, or enter new markets, contributing to steady, long-term appreciation in their stock prices.
Bottom line
With a dividend yield of 6%, higher than the 4.99% five-year average, and trading at a historically lower-than-average 12.95 times earnings, Canadian Utilities stock is an ideal choice for those seeking dividends. What’s more, the stock may be down 23% in the last year but has been climbing back as interest rates look like they may lower in the next few months. This would be great for a company that takes out loans, with lower interest rates mean lower costs.
All in all, the company is a stellar, valuable option, providing investors stability, dividend income, and long-term growth.
