Some stocks are worth waiting for. When the market hands you a quality business at a discount, it might be time to act. Capital Power (TSX: CPX) is one of those names. It’s down roughly 40% from its all-time high near $85. And for long-term investors, this might be the buying opportunity that pays off for decades.
Capital Power is a utility-style power producer based in Alberta, with assets across Canada and the United States. It generates electricity using natural gas and renewables like wind and solar. Over the years, it has been shifting away from coal and towards cleaner energy. That transition hasn’t been cheap, but it’s setting the company up for long-term relevance.
In its most recent earnings report, Capital Power posted revenue of $988 million for the first quarter of 2025, down from $1.12 billion in the same quarter last year. While that was down from last year’s gains on emissions credits and derivative contracts, it wasn’t a red flag. Operationally, the company is doing just fine.
Adjusted earnings before interest, taxes, depreciation, and amortization came in at $367 million, up from $279 million the year before. That’s a 32 percent increase. Adjusted funds from operations were also strong at $218 million, or $1.57 per share, up from $1.15 a year earlier. Cash flow from operations totalled $210 million. So, even if revenue dipped slightly, core results remained solid.
Earnings per share were lower on a reported basis—$1.03 versus $1.58 in the first quarter (Q1) of 2024—but that doesn’t tell the full story. Lower gains on commodity contracts and increased financing costs impacted the bottom line. Still, the company raised its dividend to $0.6519 per share. That’s an annualized payout of $2.61 and a yield of around 5% at recent prices.
With a track record of raising its dividend by 6% a year since 2013, Capital Power has built investor trust. It now aims to continue that growth rate through 2025. And even with interest rates elevated and power prices normalizing in Alberta, the company remains confident in its outlook.
The stock’s fall from its high isn’t due to a collapse in the business. Rather, it’s a mix of concerns about Alberta electricity pricing, rising borrowing costs and lower market sentiment for utilities. Those are real factors, but none of them suggest Capital Power’s model is broken. In fact, its clean energy projects and recent U.S. acquisitions are moving the company in the right direction.
Debt is something to keep an eye on. Capital Power reported around $5.0 billion in loans and borrowings, and finance costs rose to $61 million in the first quarter from $42 million the year before. That’s a noticeable jump. But the company still maintains an investment-grade credit rating and has access to capital. It’s using that funding to support new projects and strategic growth.
The Genesee repowering project is one example. It’s a key step in removing coal from its portfolio and adding more flexible natural gas. Meanwhile, recent acquisitions in the U.S., such as the Harquahala and La Paloma facilities, are already contributing to results. These moves aren’t just about optics—they’re helping the bottom line.
For long-term investors, the combination of a stable 5% yield, a growing dividend and a lower share price can be compelling. It’s rare to get all three at once. That doesn’t mean the stock is risk-free. Interest rates could stay high. Power prices in Alberta could remain soft. But neither of those things changes the company’s long-term strategy.
When a solid utility gets cheaper for reasons that aren’t structural, it might be worth buying. Capital Power still has work to do, but its consistent cash flow, dividend history and energy transition efforts suggest it’s built to last. If you’re willing to hold through short-term noise, this could be a standout stock to tuck into your TFSA and forget about—until it starts to shine again.
