When investing for the long term, consider TSX stocks with fundamentally strong businesses and the ability to deliver steady growth and regular income. Notably, this approach helps you achieve an above-average total return, a combination of both capital appreciation and dividend payouts that can compound your wealth over time.
Hydro One (TSX:H) is one such high-quality Canadian stock offering both growth and income. Furthermore, this utility company operates a defensive business, thus adding stability to your portfolio in the long run.
Here’s why Hydro One is a solid long-term bet
Hydro One is one of Canada’s top utility stocks, offering investors a balance of growth, income, and long-term stability. As it primarily focuses on electricity transmission and distribution, Hydro One benefits from a regulated business model that shields it from the volatility related to power generation and commodity markets. This steady operational framework allows the company to produce consistent earnings and reliable cash flow, even when broader market conditions fluctuate.
That financial stability and growth have positioned Hydro One as a reliable dividend payer. Hydro One has rewarded investors with regular dividend increases, supported by its expanding rate base and stable, low-risk earnings. Between 2016 and 2022, its dividend grew at a compound annual growth rate (CAGR) of 5%. Since 2022, this growth has accelerated to approximately 6% annually. While the current dividend yield of 2.6% might seem modest, the reliability and sustainability of those payouts are what make them truly valuable for long-term investors.
Hydro One isn’t just about dividends. It’s also about growth. The company’s stock has surged by over 19% in 2025 alone, reflecting investor confidence in its steady business model and strong fundamentals. Over the past five years, Hydro One’s share price has more than doubled, gaining roughly 104.5% and delivering a CAGR of about 15.4%.
In short, its combination of dependable income, steady growth, and long-term stability makes it one of the most compelling investments.
Can Hydro One stock double in 5 years?
Hydro One’s rate-regulated operations will enable the company to generate predictable cash flows, supporting its payouts and stock price. revenues. Moreover, its growth is anchored in self-funded organic projects, which are likely to expand its rate base and modernize aging infrastructure. Its multi‑year capital program will further help grow its rate base, enabling it to generate low-risk earnings.
Furthermore, Hydro One is well-positioned to benefit as electricity demand increases, driven by a growing population, the clean energy transition, and industrial development. The company is also investing in modernizing its transmission and distribution systems, integrating renewable energy sources, and implementing advanced technologies, which bode well for future growth. Moreover, its small, unregulated segment also holds solid growth potential.
Looking forward, the management expects its rate base to expand by 6% annually through 2027, driving earnings at a CAGR of 6-8% over the same period. This will help Hydro One to increase its dividend by 6% annually in the medium term. Moreover, its focus on productivity savings and diversifying its supply chain will help protect against cost overruns and tariff uncertainties.
Notably, Hydro One stock has grown at a CAGR of over 15% in the last five years. However, given its growing rate base and strong electricity demand, Hydro One’s growth rate could accelerate, which will boost its stock price. Even if Hydro One stock grows at a 15% CAGR, the stock could still reach $104.15 in five years, more than double its closing price of $51.78 on October 30.
