If you’re looking to grow your wealth through investing, the stock market remains one of the most effective paths. Yet, as any investor knows, market volatility can take a toll, not just on your portfolio but also on your peace of mind. That’s why building a well-diversified portfolio by incorporating defensive stocks can provide the kind of stability that will help you sleep well at night.
Among the most reliable defensive plays are utility stocks. These companies deliver essential services that households and businesses rely on, no matter the state of the economy. This consistent demand gives utilities a layer of resilience and translates into reliable earnings.
In addition to their stability, many utilities operate in regulated environments, which adds predictability to their earnings. Thanks to their resilient business and predictable earnings, utilities typically have a history of paying and increasing their dividends.
All of these factors collectively make utilities top defensive stocks for stability and consistent returns.
Against this backdrop, here is a top Canadian utility stock that’s my ultimate sleep-well-at-night pick.
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The ultimate Canadian utility stock
Investors seeking a top Canadian utility stock could consider Hydro One (TSX: H). It offers stability, income, and growth. Hydro One is the largest electricity transmitter and distributor in Ontario, Canada’s most populous province. Thus, it plays a critical role in the region’s power infrastructure.
Further, since Hydro One is a pure-play electric power transmission and distribution company, it steers clear of power generation, shielding it from commodity price swings. This operating structure enables it to generate steady earnings and cash flow in all market environments.
Roughly 99% of Hydro One’s operations are fully rate-regulated, providing predictable revenues. Moreover, its growth is anchored in self-funded, organic projects focused on expanding its rate base and modernizing aging infrastructure. Moreover, its small but growing unregulated segment hints at future expansion potential.
Its defensive business model and low-risk earnings have helped Hydro One to reward its shareholders with higher dividend payments. Hydro One has consistently increased its dividend since 2017 and currently offers a yield of 2.7%.
Besides stability and income, Hydro One’s stock has grown at a compound annual growth rate (CAGR) of 17.2% in the last five years, delivering stellar capital gains of about 121%.
Hydro One poised to deliver worry-free returns
Hydro One is a top long-term bet poised to deliver worry-free returns. Its multi‑year capital program will help expand its rate base, enabling it to generate predictable and growing earnings. This will support its dividend payments and drive Hydro One stock higher.
As electricity demand is rising, driven by an increasing population, clean energy shift, and industrial developments, Hydro One is well-positioned to benefit. The company is investing in modernizing its transmission and distribution systems, integrating renewables, and implementing advanced technologies, which augurs well for growth.
Its robust capital investment plan is driving expansion of its regulated rate base, which is projected to reach $31.8 billion by 2027. This will translate into predictable earnings growth of 5–7% annually, supporting a 6% annual dividend increase.
Moreover, its focus on productivity savings and diversifying its supply chain will guard against cost overruns and tariff uncertainties.
Taken together, Hydro One is well-positioned for sustainable growth. As its regulatory rate base swells and productivity initiatives pay dividends, Hydro One is likely to deliver total returns.
The bottom line
With its rate-regulated operations, consistent dividend growth, and strong capital investment plan, Hydro One emerges as the ultimate utility stock. Its predictable earnings and a growing rate base position it well to deliver steady, long-term returns, helping you sleep well at night.
