Utility stocks are some of the most lucrative and defensive investments on the market. While there are more than a few reasons for that view, the primary reason stems from the unique business model that they adhere to. So then, what are some good utility stocks to consider?
Let’s take a look at several for investors to consider buying this month.
Source: Getty Images
All hail the (dividend) King
Canadian Utilities (TSX:CU) is a diversified utility that offers investors both electricity and natural gas offerings, encompassing both transmission and distribution segments. This adds yet another dimension to the defensive prowess of owning utility stocks.
Perhaps the main reason why investors love Canadian Utilities is its dividend.
Canadian Utilities carries the crown as holding the longest streak of annual dividend increases of any stock on the market. That streak currently works out to an impressive 53 consecutive years, making this one of the good utility stocks for any investor to consider.
As of the time of writing, Canadian Utilities pays out an impressive 4.7% yield. This means that investors who drop $35,000 into this utility stock will generate an income of just over $1,640.
Investors considering Canadian Utilities and wanting to start earning that juicy income should note that the stock goes ex-dividend later this week.
In short, Canadian Utilities is one of the good utility stocks to buy and hold for the long term.
Another solid option for income seekers
Investors looking for yet another one of the good utility stocks to buy should consider Fortis (TSX:FTS). Fortis is one of the largest utility stocks on the continent. The company boasts 10 operating regions across the U.S., Canada, and the Caribbean.
Critics often perceive utility stocks as boring investments that lack any growth. Part of the reason for that view is the belief that once dividends are paid out, there is little room or incentive for the utility to invest in growth.
Fortunately, when it comes to evaluating Fortis as one of the best utility stocks to buy, that couldn’t be further from the truth.
Fortis has invested heavily in growth over the years, completing increasingly larger acquisitions. More recently, that focus has turned to upgrading its existing facilities and transitioning to renewables.
In fact, Fortis has a whopping $26 billion capital fund earmarked to fund growth over the next several years.
Turning to dividends, Fortis continues to impress. Like Canadian Utilities, Fortis is another Dividend King with over 50 consecutive years of annual increases.
As of the time of writing, Fortis offers investors a tasty 3.6% quarterly dividend. Using that same $35,000 example from above, investors will earn just over $1,220.
Investors who are not ready to draw on that income can choose to reinvest it. This will allow that eventual income to continue growing until needed.
Some good utility stocks to buy today, hold forever
Utility stocks like Fortis and Canadian Utilities can provide decades of stable growth and income. Even better, more than half a century of dividend increases sets an incredible precedent for investors looking at options to buy-and-forget.
Throw in a juicy quarterly dividend wrapped in a defensive shell, and you have two of the best long-term investments on the market.
In my opinion, one or both of these utility stocks should be core holdings in any well-diversified portfolio.
Buy them, hold them, and watch your future income grow.
