Although the Canadian stock market seems on track to end 2024 with solid gains of nearly 18%, we’re still entering 2025 with lingering uncertainties. Concerns about persistent inflationary pressures, questions surrounding the timing of future rate cuts, and the potential for escalating trade tensions under the new U.S. administration are weighing on investor sentiment.
In such an uncertain environment, it makes sense for long-term investors to add some defensive stocks to their portfolios that can provide stability and consistent returns. And utility stocks, known for their reliable cash flows and dividend payouts, could be a wise choice for weathering market volatility.
In this article, I’ll highlight two no-brainer utility stocks that you can consider buying now, given their proven track record of resilience in tough markets.
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Fortis stock
Fortis (TSX: FTS) could be the first utility stock to buy right now, as its robust fundamentals and solid financial base make it an attractive option for defensive investors getting into 2025. After rising by 11% so far in 2024, FTS stock currently trades at $60.35 per share with a market cap of $30 billion. At this market price, it offers a 4.1% annualized dividend yield.
The company’s impressive financial growth trends clearly reflect its strong position as a leader in the North American regulated utility space. In the third quarter of 2024, Fortis reported adjusted earnings of $0.85 per share, surpassing Street analysts’ expectations with the help of rate base expansion across its utilities, particularly in Arizona, where Tucson Electric Power benefited from new customer rates introduced in late 2023.
In addition, Fortis’s $26 billion capital plan for 2025-2029 highlights its commitment to long-term growth. Notably, this plan is expected to grow the company’s rate base at a compound annual growth rate of 6.5%, increasing it from $38.8 billion in 2024 to $53.0 billion by 2029.
With its key projects like the Roadrunner Reserve 2 battery energy storage system, Fortis plans to strengthen its infrastructure and support renewable energy integration, which could help it benefit from the growing demand for clean energy in the coming years.
AltaGas stock
AltaGas (TSX: ALA) could be another excellent utility stock that long-term investors should consider as we move into 2025. The Canadian firm operates a balanced business model, with its revenue coming from both its utilities segment, which provides stable cash flows, and its midstream segment, which benefits from growing energy exports.
After surging by 19.3% year to date, ALA stock currently trades at $33.20 per share with a market cap of $9.9 billion. It has a 3.8% annualized dividend yield at the current market price.
AltaGas has been actively making efforts to maintain growth in 2025, which is reflected in its recent announcement of a 6% dividend increase. With its balanced approach of leveraging Utilities for stable cash flows and Midstream for growth opportunities, the company also projects normalized earnings before interest, taxes, depreciation, and amortization between $1.775 billion and $1.875 billion in 2025.
Moreover, the company’s strategic investments in projects like Pipestone 2 and Ridley Island Energy Export Facility highlight its commitment to infrastructure expansion and renewable energy integration, making it even more attractive to buy now and hold for the long run.
