When it comes to dependable income, Canadian investors often gravitate toward the usual suspects: big banks, telecoms, or pipeline giants. But there’s one utility stock that continues to fly under the radar, even as it consistently delivers growth, pays a solid dividend, and powers the lives of over 1.5 million Ontarians. That stock is Hydro One (TSX: H), and for long-term income investors, it just might be the best dividend play of the decade.
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Working hard
Now, let’s be honest, utility stocks don’t usually get hearts racing. They’re not flashy, and they rarely dominate headlines. But what they lack in excitement, they make up for in reliability, and Hydro One is a case study in that. It quietly operates the province’s largest electricity transmission and distribution business, boasting $36.7 billion in assets and more than $8.7 billion in annual revenue over the last 12 months. It also just posted some of its best numbers ever.
In the first quarter of 2025, Hydro One reported basic earnings per share (EPS) of $0.60, up from $0.49 a year earlier. That’s a 22% jump. Net income rose to $358 million, and revenues surged to $2.4 billion, largely thanks to higher demand and new Ontario Energy Board approved rate hikes. Crucially, Hydro One is not just growing, it’s growing profit. Operating margins sit near 25%, and the utility stock continues to pump capital into future infrastructure.
Its dividend, meanwhile, has quietly kept climbing. The most recent payout was $0.3331 per share, putting the annualized dividend at $1.33 and giving it a forward yield of 2.7% as of writing. That’s not the highest yield on the TSX, but when paired with consistent growth, low volatility, and a sustainable 61.9% payout ratio, it becomes far more appealing. In fact, a $10,000 investment would bring you $264 each year at writing!
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| H.TO | $50.01 | 199 | $1.33 | $264.67 | Quarterly | $9,951.99 |
More to come
Unlike some higher-yielding stocks that may wobble with every rate hike or market tremor, Hydro One is built like a fortress. Its beta is just 0.28, meaning it barely flinches when the broader market gets rattled. For retirees and conservative investors, that kind of stability is gold.
What’s more, the utility stock continues to reinvest intelligently. In Q1 alone, Hydro One made $735 million in capital investments, much of it aimed at strengthening Ontario’s grid and preparing for future electrification. It also placed $423 million worth of new assets into service, up significantly from $240 million in the same quarter last year.
And then there’s its strategic expansion. The utility stock recently acquired a 48% interest in the East-West Tie Line, a 450-km transmission line connecting Northern Ontario’s grid. This addition enhances Hydro One’s regional footprint and positions it to benefit from future growth in renewables and remote connectivity.
Considerations
Critics might point to the company’s debt load as Hydro One reported $17.8 billion in total debt this quarter, with a debt-to-equity ratio of 144%. But this isn’t out of line for regulated utilities, where long-term borrowing supports long-term infrastructure buildouts. So long as rates remain stable and the regulator allows rate adjustments, Hydro One is well-positioned to manage its leverage.
The bigger concern is growth potential. With its operations confined to Ontario and limited by regulatory oversight, Hydro One doesn’t exactly scream explosive upside. But that’s also what makes it predictable. It’s a utility stock that knows its lane and drives in it with discipline.
While it may never be the darling of growth investors, Hydro One is ideal for those looking to build slow, steady, and tax-efficient wealth. And with population growth, electrification of transportation, and demand for grid reliability all on the rise, the utility’s future looks brighter than ever.
Bottom line
So, yes, you won’t see Hydro One on any get-rich-quick lists. But for investors seeking peace of mind, consistent income, and a dividend that’s built to last, this utility stock checks every box. Over the next decade, there may be trendier trades, but there may not be a more dependable one. That’s why, for my money, Hydro One is the best dividend play of the decade.
