Canadians looking to create a low-cost passive income stream for life should consider investing in blue-chip utility stocks that offer an attractive dividend. Typically, utility stocks are fairly recession-resistant, allowing them to generate cash flows across business cycles. The best utility stocks also increase dividend payouts each year, significantly enhancing the yield at cost.
Here are two such dividend stocks you can buy for lifetime income.
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Is this TSX dividend stock a good buy?
Valued at a market cap of $36 billion, Fortis (TSX: FTS) has returned 130% to shareholders in dividend-adjusted gains over the last 10 years. Fortis is a diversified electric and gas utility company serving approximately 3.5 million customers across Canada, the United States, and the Caribbean.
It generates, transmits, and distributes electricity through operations in Arizona, British Columbia, Alberta, Newfoundland and Labrador, Ontario, Prince Edward Island, and the Cayman Islands.
Fortis owns hydroelectric and gas-fired generating facilities totaling over 3,500 megawatts of capacity, and operates roughly 91,100 kilometres of distribution lines and 51,700 kilometres of natural gas pipelines.
In 2024, the diversified utility operator reported net earnings of $1.6 billion or $3.28 per share, an increase of 6% year over year. It deployed a record $5.2 billion in capital investments across its electricity and natural gas systems last year.
Management increased the dividend for the 51st consecutive year, raising the payout to $2.39 per share in 2024, up 4% from 2023. Fortis estimates to grow dividends by 5% annually through 2029, on average, as it expects to allocate $26 billion towards capital expenditures over the next five years.
Fortis also forecasts its rate base to expand from $39 billion in 2024 to $53 billion in 2029, indicating an annual growth rate of 6.5%. Moreover, 93% of the company’s assets are energy delivery focused on transmission and distribution rather than generation, naturally limiting environmental exposure.
Fortis has increased its annual dividend per share from $1.53 in 2016 to $2.39 in 2024. Analysts forecast the payout to rise to $2.95 per share in 2029.
Is this dividend stock a good buy?
Canadian Utilities (TSX: CU) operates regulated electricity transmission and distribution, natural gas services, and renewable energy across Canada, Australia, and internationally.
It provides integrated energy infrastructure, including power generation, natural gas storage, industrial water solutions, and electricity distribution.
Canadian Utilities delivered solid second-quarter results while advancing major growth projects that position it for significant expansion beyond 2027. The diversified utility operator reported adjusted earnings of $121 million or $0.45 per share, up from $117 million in the prior year period.
Its most significant growth driver is the $2.8 billion Yellowhead natural gas pipeline project, which is viewed as critical infrastructure for Alberta’s expanding industrial sector. Already 90% contracted, the pipeline will address capacity constraints on the provincial gas system and is expected to contribute $3.9 billion annually to Alberta’s gross domestic product.
Natural gas storage continues to emerge as a strong performer with revenue expected to more than triple in 2025 compared to 2021 after capacity doubled from 52 to 117 petajoules.
Canadian Utilities approved expansions adding 10% capacity through well development for 2026 in-service. Management expressed interest in inorganic growth opportunities for storage assets across North America, given strong fundamentals from liquified natural gas exports and increased gas-fired power generation demand.
Year-to-date operating cash flows increased $105 million to $1 billion while capital expenditures rose $145 million to $783 million, reflecting accelerated investment in system upgrades and growth projects.
Analysts forecast free cash flow to increase from $311 million in 2025 to $400 million in 2027. Canadian Utilities has raised its annual dividend per share from $1.30 in 2016 to $1.81 in 2024. CU stock’s payout is forecast to increase to $1.89 per share in 2025.
