If you’re looking for a steady, no-stress dividend stock to hold for the next decade, Hydro One (TSX:H) might be the answer. It’s the kind of dividend stock that doesn’t make headlines with wild swings or shiny promises. But what it lacks in flash, it makes up for in reliability, growth, and income. In a world where everyone’s chasing the next big thing, sometimes the best play is the one that just keeps delivering. That’s exactly what Hydro One has been doing. So let’s get into it.
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About Hydro
The utility giant is responsible for most of Ontario’s electricity transmission and distribution. So right away, you know it’s not going anywhere. That kind of entrenched role in essential infrastructure makes it a defensive play, especially in uncertain markets. But more than just stability, Hydro One has been proving it can grow and reward shareholders while serving energy consumers.
In its latest results for Q1 2025, Hydro One posted earnings of $277 million, or $0.46 per share, compared to $296 million and $0.49 a year earlier. Revenue dipped slightly to $2.15 billion from $2.2 billion. But this wasn’t due to demand dropping; the dividend stock faced higher operation, maintenance, and administrative costs, along with interest expense increases and higher depreciation. The transmission business alone still saw an increase in net income from $211 million to $221 million.
The utility also hiked its dividend again, now paying $0.3325 per share quarterly. That’s a major boost and continues Hydro One’s longstanding trend of steady increases. Over the last five years, the dividend stock has consistently rewarded shareholders, raising the payout while keeping its payout ratio in check. At the current share price, the dividend yield sits just under 2.7%, not the highest on the TSX, but backed by a fortress-like business.
More to come
What really stands out with Hydro One is how boring it is, in the best way possible. It’s not making risky acquisitions or promising sky-high growth. It’s focused on keeping the lights on, upgrading infrastructure, and growing earnings at a slow and steady pace. And in the utility sector, that’s a winning formula. Hydro One expects its rate base to grow in the mid-single digits annually. That translates into more earnings and, ideally, more dividends for shareholders.
It’s also worth noting that Hydro One is in the middle of a major capital investment cycle. In Q1 alone, the company invested $601 million into its grid, compared to $546 million last year. These upgrades are aimed at improving reliability and expanding capacity. With demand for electricity only expected to grow, especially with the rise of electric vehicles and data centres, this is the kind of forward-looking investment that can pay off long term.
From a valuation standpoint, Hydro One isn’t trading at a massive discount, but that’s not unusual for high-quality defensive names. Investors tend to hold onto it in good times and bad. Still, it’s not overly expensive either. Its price-to-earnings ratio sits around 24 at writing. That’s fair, especially for a dividend stock with predictable cash flow and near-monopoly status in a critical service.
Bottom line
Of course, no dividend stock is without risk. Interest rates are still a headwind for capital-heavy utilities like Hydro One. Higher rates make debt more expensive and can put pressure on margins. But Hydro One has managed this risk well. It has staggered its debt maturities and maintained a strong investment-grade credit rating. That gives it flexibility even in a tougher borrowing environment.
In short, Hydro One might not be the flashiest stock, but it’s a top-tier dividend play. It has reliable earnings, strong cash flow, and a clear growth plan. The dividend stock won’t double in a year, but that’s not the point. This is the kind of name you buy, tuck away in your portfolio, and forget about. That is, until the dividend lands in your account, quarter after quarter.
