For most investors, identifying dividend stocks that not only provide reliable income but also have significant growth potential is the ultimate goal. As we look ahead to 2025, three Canadian dividend-paying stocks stand out for their strong fundamentals and upside potential.
Here’s why I’m keeping these three utility giants on my watch list to start 2025 and why these companies may be poised for some massive gains in the year ahead.
Fortis
Fortis (TSX:FTS) is a stalwart in the utility sector, known for its consistent dividend payments and growth. With a history of 50 consecutive years of dividend increases, it is a favourite among income-focused investors. The stable business model of the company, supported by regulated utility operations across North America, ensures predictable cash flows.
Fortis continues to invest heavily in infrastructure upgrades and expansion. The company has outlined a robust capital investment plan of approximately $22.3 billion over the next five years for modernizing its grid and integrating renewable energy sources. These investments are expected to drive rate-based growth and, by extension, dividend increases over time.
Moreover, the regulated nature of Fortis’s operations shields it from economic volatility, making it a defensive play during uncertain times. As the demand for electricity and gas remains steady, Fortis is well-positioned to deliver reliable returns to its shareholders.
Hydro One Limited
Hydro One Limited (TSX:H) is Ontario’s largest electricity transmission and distribution company. Its monopoly-like position in the province ensures steady revenue from regulated operations. This stability translates into consistent dividend payouts for investors.
As Canada pushes towards a greener economy, Hydro One stands to benefit from increased electrification across industries. The company is investing in grid modernization and expanding its capacity to accommodate the growing demand for clean energy. These initiatives are expected to support long-term growth and enhance shareholder value.
The current dividend yield of Hydro One is approximately 2.5%, which is appealing to income investors. Coupled with its commitment to gradual dividend growth, it offers a compelling combination of income and growth potential. The company’s low payout ratio further indicates room for future dividend increases.
Brookfield Renewable Partners
Brookfield Renewable Partners (TSX:BEPC) is at the forefront of the global shift towards clean energy. The company’s diversified portfolio of renewable assets, including hydroelectric, wind, solar and storage facilities, spans multiple continents, providing geographic and operational diversity.
With governments and corporations worldwide committing to net-zero carbon goals, the demand for renewable energy is surging. Brookfield is well-positioned to capitalize on this trend, supported by its expertise in developing and managing renewable projects. The company’s ongoing investments in new projects and acquisitions ensure a steady pipeline of growth opportunities.
Brookfield Renewable has a strong track record of delivering annualized total returns of over 10% and growing its dividend by 5-9% annually. Its current dividend yield of approximately 5% makes it an attractive choice for investors seeking a mix of income and capital appreciation. In addition, the renewable energy sector is relatively insulated from economic downturns, as the demand for clean energy continues to grow, irrespective of market conditions. This resilience adds an extra layer of security for investors in Brookfield Renewable.
