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