When markets feel uncertain and headlines are packed with volatility, investors often turn toward something solid – a dividend stock that doesn’t need to be exciting to deliver results. Capital Power (TSX: CPX) fits that profile. It’s the kind of company you can buy now, tuck into a long-term portfolio, and let quietly compound over the years. With shares down from their highs and the company showing strength in its latest earnings, this could be one of the top TSX stocks to buy and hold for decades.
About CPX
Capital Power is a power producer based in Edmonton, and it operates a range of energy facilities across Canada and the United States. What sets it apart is its balance between natural gas and renewables. In a world that’s pushing harder toward decarbonization but still relies on dependable energy sources, that balance can make a big difference. Capital Power offers exposure to growth in renewables while also generating stable cash flow from existing thermal operations.
As of writing, shares of Capital Power are trading at around $55.75. That’s down about 19% from its 52-week high of $68.40, which opens the door for value-focused investors to step in at a more attractive price. The dip reflects broader concerns in the utility sector tied to interest rate sensitivity and market caution, not a specific problem with the dividend stock itself. When these short-term pressures fade, the stock could be in a good position to rebound.
Into earnings
Its most recent earnings report shows why. In the first quarter of 2025, Capital Power posted revenue of $988 million, well above the $816 million analysts expected. Earnings per share (EPS) came in at $1.03, nearly double the forecast of $0.52. This kind of earnings surprise isn’t common for utilities, which makes it all the more notable. It also reflects management’s ability to run a tight operation and deliver growth even during economic headwinds.
That strong earnings performance is backed up by smart strategic moves. Capital Power recently closed a US$2.2 billion acquisition of several natural gas plants in the U.S., specifically in the PJM market, a major power transmission area that includes parts of 13 states. This deal diversifies its revenue and places it in a highly liquid, competitive market. The dividend stock also continues to invest in renewable projects, maintaining its long-term vision of transitioning toward cleaner energy.
Value and income
At the same time, Capital Power hasn’t stretched its balance sheet to get here. It has kept its net debt manageable and still holds an investment-grade credit rating. Earlier this year, it issued US$1.2 billion in green bonds to support its expansion, showing that it can raise capital without straining operations. These financial decisions make it more resilient if interest rates stay elevated longer than expected.
And then there’s the dividend. Capital Power currently pays out $2.61 annually, which amounts to a yield of about 4.6% at current prices. That’s an appealing level of income, especially when paired with growth. The dividend stock stated its goal of increasing the dividend by about 6% annually through 2025. For long-term investors who reinvest dividends, this creates a powerful compounding engine that builds wealth slowly and steadily over time.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND (ann.) | TOTAL PAYOUT | FREQUENCY | INVESTMENT TOTAL |
|---|---|---|---|---|---|---|
| CPX | $55.78 | 179 | $2.61 | $466.76 | Quarterly | $9,983.62 |
The stock also looks reasonably valued. With a price-to-earnings ratio (P/E) around 12 and strong free cash flow, there’s room for both yield and capital appreciation. Analysts seem to agree, with an average 12-month price target of $64.73, offering a potential 16% upside. That’s before factoring in the dividend.
Bottom line
It’s easy to get distracted by the next big thing in investing, but some of the best long-term performers are the ones that quietly do their job year after year. Capital Power fits that mould. It offers dependable income, a growing presence in renewable energy, and disciplined financial management. It won’t double overnight, but it could deliver double-digit annual returns when dividends and growth are combined.
