When it comes to selecting a stock to buy and hold forever in your Tax-Free Savings Account (TFSA), Hydro One (TSX:H) emerges as a compelling choice. As Ontario’s largest electricity transmission and distribution provider, Hydro One offers the stability and growth potential that long-term investors crave.
Hydro One stock
Hydro One is the backbone of Ontario’s electrical grid, delivering power to nearly 1.4 million customers across the province. Its regulated business model ensures consistent revenue streams, making it a reliable pick for those looking to build wealth over time.
In the third quarter (Q3) of 2024, Hydro One reported a net income attributable to common shareholders of $371 million, up from $357 million in the same period of 2023. This translates to basic earnings per share (EPS) of $0.62. This was a slight increase from $0.60 the previous year. The uptick was primarily driven by higher revenues approved by the Ontario Energy Board (OEB) and increased energy consumption.
The company’s revenues for Q3 2024 stood at $2.192 billion, marking a $258 million increase from the same quarter in 2023. After accounting for purchased power, revenues were $1,145 million, up by $65 million year over year. This growth is attributed to OEB-approved rate increases and higher energy demand.
What you gain now
Hydro One continues to invest heavily in Ontario’s electricity infrastructure. In Q3 2024, the dividend stock made capital investments totalling $773 million and placed $597 million worth of new assets into service. These investments aim to enhance the reliability and performance of the province’s power system.
For income-focused investors, Hydro One’s dividend history is enticing. The company declared a quarterly dividend of $0.3142 per share for investors of record. With a forward annual dividend yield of approximately 2.77%, it offers a steady income stream. This is particularly attractive within the tax-sheltered confines of a TFSA.
Furthermore, for those on the more conservative side, Hydro One’s stock exhibits low volatility, with a five-year beta of 0.34. This means it tends to experience smaller price swings compared to the broader market, providing a smoother ride for investors during turbulent times — something many investors could certainly use these days.
Future focus
Looking ahead, Hydro One is well-positioned to benefit from Ontario’s ongoing economic growth and the increasing demand for electricity. The dividend stock’s strategic investments in infrastructure and commitment to operational excellence suggest a promising trajectory — one that should appeal to investors both for sustained earnings and dividend growth.
Holding Hydro One in a TFSA allows investors to enjoy tax-free growth on both capital gains and dividends. Given the company’s stable earnings, regular dividends, and essential role in Ontario’s energy landscape, it stands as a strong candidate — one that’s perfect for a long-term, buy-and-hold strategy within a TFSA.
In the quest for a stock to buy and hold forever in your TFSA, Hydro One offers a blend of stability, growth potential, and reliable income. Its pivotal role in powering Ontario, coupled with prudent financial management, makes it a worthy cornerstone for any long-term investment portfolio.
