When headlines start warning about a possible U.S. recession, it’s normal for Canadian investors to feel nervous. The economies of Canada and the U.S. are deeply connected, so a downturn south of the border often sends ripples across the TSX. In times like these, the best thing to do isn’t to panic. It’s time to look for stable, recession-resistant stocks. One name that stands out is Hydro One (TSX:H).
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Hydro One
Hydro One is a utility company that does one thing very well: it keeps the power on across Ontario. It operates Ontario’s largest electricity transmission and distribution system, delivering power to nearly 1.5 million customers. Utilities like Hydro One tend to hold up well during economic slowdowns. People need electricity no matter what’s happening with the economy, and that steady demand helps the company generate consistent revenue and earnings.
The market certainly seems to agree. Hydro One currently has a market cap of about $29.2 billion. Its business is protected by regulation, meaning it earns predictable returns on its investments. This is a big reason why utilities are considered safe havens when the economy looks shaky. While other companies might see earnings dip or become volatile, Hydro One can rely on a steady income stream backed by long-term contracts and regulated rates.
In its most recent earnings report, Hydro One posted solid results. For the first quarter of 2025, it generated revenue of $2.41 billion and net income of $358 million. That’s a big improvement from $200 million the quarter before. Earnings per share (EPS) came in at $0.60, ahead of analyst expectations, which were closer to $0.54. Beating earnings during uncertain times gives investors confidence, and Hydro One has now delivered that kind of result consistently.
Looking ahead
One of the biggest reasons to consider Hydro One right now is the dividend. The dividend stock recently raised its dividend to $1.33 per year. Based on its recent share price of around $48.75, that’s a yield just under 2.8%. While it’s not the highest dividend on the TSX, what makes it appealing is the reliability. Hydro One has increased its dividend each year since it went public in 2015.
Another reason Hydro One is attractive is that it’s not flashy. That may sound boring, but in a volatile market, boring can be a good thing. This is a dividend stock that doesn’t swing wildly. Its low beta of around 0.16 means it moves less than the broader market. That’s exactly what investors want when worried about a U.S. recession. You don’t want drama. You want calm, and Hydro One delivers just that.
There are always risks to consider. As a regulated utility, Hydro One depends heavily on decisions made by the Ontario Energy Board. If regulations change or the province freezes rate increases, it could put pressure on earnings. But even with that in mind, Hydro One has managed to navigate policy changes well over the past decade. It continues to invest in grid modernization and infrastructure upgrades, setting itself up for long-term success.
Bottom line
If a U.S. recession does hit, it could impact exports, trade, and business confidence in Canada. But demand for electricity isn’t going anywhere. And dividend stocks like Hydro One are built to thrive in that kind of environment. With solid earnings, a dependable dividend, and a low-volatility profile, this is a TSX stock worth considering right now if you’re looking for safety in stormy weather.
