Got $5,000? 3 Utility Stocks to Buy and Hold Forever

These three Canadian utility stocks offer steady growth, strong dividends, and long-term wealth. Buy and hold them forever

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Investors often overlook the Canadian utility sector in favour of high-growth industries. But what if you could get the best of both worlds: stability, reliable dividends, and solid capital appreciation? Some top Canadian utilities have grown a small $5,000 investment three-fold over the past decade. A similar-sized investment in Brookfield Infrastructure Partners (TSX:BIP.UN) stock 15 years ago could have grown into more than $70,000 with dividend reinvestment!

BIP.UN Chart

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If you have $5,000 to invest today, these three Canadian utility stocks could be the foundation of a resilient and growing portfolio.

Maxim Power stock: A high-growth utility play

Maxim Power (TSX:MXG), a Calgary-based independent power producer, has been making waves in Alberta’s energy sector. With a market cap of just $400 million, this small but ambitious utility company has delivered over 210% total returns in five years, including a 15% rally during the past month.

The company’s gas-powered power plant is generating strong cash flow while management actively explores wind power expansion. In October 2024, Maxim Power voluntarily repaid its senior credit facility and rewarded investors with a special $0.50 per share dividend in November. The business is generating surplus cash, and its financial position is intact. Additionally, the utility renewed its share-repurchase program, signalling that management sees value in the stock.

While revenue has been somewhat volatile, free cash flow has surged in 2024, putting the company in a strong financial position. As it continues to expand and optimize operations, Maxim Power stock has significant upside potential, making it a compelling pick for investors looking for long-term capital appreciation with future dividend potential from a utility stock.

Brookfield Infrastructure Partners: A global infrastructure giant with growing dividends

For investors seeking stable income and strong capital growth, Brookfield Infrastructure Partners (BIP) is a premier choice. This $15 billion global infrastructure powerhouse owns and operates essential assets across utilities, transport, midstream, and data infrastructure.

BIP has been a stellar performer, tripling its revenue from $6.6 billion in 2019 to $20.6 billion in the past year. Operating income has nearly tripled to $4.9 billion while operating cash flow per share has grown from $5 in 2019 to nearly $10. The company has also increased its dividend by 23% over the past five years, making it a fantastic long-term hold for passive income seekers. The current BIP quarterly dividend yields almost 5% annually.

Brookfield is heavily investing in growth projects, pushing its free cash flow payout ratio above 100%. This strategy ensures it remains at the forefront of global infrastructure development. Long-term investors could see accelerated dividend growth, making BIP stock a top-tier global multi-utility stock to buy and hold forever.

Emera: A regulated utility with decades of dividend growth

Emera (TSX:EMA) is a well-established utility company operating in Canada, the U.S., and the Caribbean, with a strong presence in electricity generation, transmission, and natural gas distribution. The company’s six regulated utilities serve millions of customers, providing predictable revenue and low volatility—a key factor in long-term portfolio stability.

Emera recently launched a $20 billion five-year capital investment plan, the biggest in the company’s history. Its current $8.8 billion three-year capital investment plan aims to grow revenue by 7-8% annually through 2026, with adjusted earnings per share (EPS) projected to rise 5-7% per year. Thanks to its regulated rate increases in Florida, the company has additional cash flow tailwinds that could support future dividend hikes.

With a 5.2% dividend yield and an impressive 17-year track record of consecutive dividend increases, Emera stock remains an ideal pick for investors looking to generate reliable passive income for decades.

Investor takeaway

If you have $5,000 to invest, the three Canadian utility stocks provide a unique blend of growth, passive income, and stability. Maxim Power is a high-growth small-cap utility with major expansion potential that may grow your capital. Brookfield Infrastructure Partners is a global leader in essential infrastructure with a solid 5% yield that supports steady wealth accumulation, while Emera will be a rock-solid, dividend-growing utility with steady cash flow to buy and hold for decades.

By holding these utility stocks for the long run, investors can benefit from compounding dividends and long-term capital appreciation—a winning combination for wealth generation.

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.

Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Maxim Power. The Motley Fool recommends Brookfield Infrastructure Partners and Emera. The Motley Fool has a disclosure policy.

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