If you want to sleep easy at night knowing your Tax-Free Savings Account (TFSA) portfolio is backed by something stable and quietly doing its job, then you might want to pay attention to the utility sector. While hot tech stocks with high growth can grab headlines, it could be incredibly valuable to have a solid dividend-paying stock in your TFSA that does its work without needing constant monitoring.
In this article, I’ll talk about one such stock, Hydro One (TSX: H), and tell you what makes it a great pick for TFSA investors who value reliability.
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A stable TFSA stock with strong roots
If you don’t know it already, Hydro One is Ontario’s largest electricity transmission and distribution provider, with a large customer base across the province. The company’s essential service brings a level of dependability that TFSA investors often look for.
After climbing nearly 20% over the last 10 months, Hoydo stock is currently trading at $52.74 per share with a market cap of $31.6 billion. On top of that, it offers a 2.5% annualized dividend yield, which is paid out quarterly. While the dividend isn’t the highest on the TSX, it’s consistent and backed by its robust business model.
Strength in results and stability
Hydro One’s latest financial growth trends clearly show why it’s considered one of the most dependable stocks in Canada. In the second quarter of 2025, the company’s revenue climbed by nearly 2% YoY (year-over-year) to $2.1 billion. More importantly, its adjusted net profit for the quarter jumped 12% YoY to $327 million. As a result, the hydro producer’s adjusted earnings also grew over 10% from a year ago to $0.54 per share.
This strong earnings growth was largely driven by higher energy consumption across the province and new transmission and distribution rates approved by the Ontario Energy Board. While Hydro One’s depreciation, amortization, and financing charges also increased in the latest quarter, the company still managed to expand margins, reflecting the strength of its regulated operations.
And this isn’t just about one strong quarter. Over the last 12 months, Hydro One has shown a YoY increase of 8% in revenue and 11.7% in adjusted earnings.
Big plans to power future growth
In addition to strong numbers, Hydro One’s ongoing investment in modernizing and expanding its network to meet Ontario’s rising energy demands makes it an even more attractive stock for TFSA investors. In the second quarter alone, the company made $913 million in capital investments, which included placing $591 million in new assets into service.
One major project that highlights its long-term vision is the St. Clair Transmission Line. Once completed, this line will deliver 450 megawatts of clean electricity to southwestern Ontario, which is enough to power a city the size of London. This project is also being developed in partnership with First Nations through a 50-50 equity model.
Built to be a long-term TFSA anchor
What makes Hydro One a sleep-easy stock is its consistent dividends and strong track record of delivering attractive returns to investors. As the province continues to grow, so does the electricity demand. And this trend is likely to benefit Hydro One. So, if you’re looking to add something stable, essential, and rewarding to your TFSA, Hydro One is definitely worth considering.
