I’m not going to sugarcoat it: this market doesn’t look like one where there’s any place to hide anymore.
From high-flying growth stocks in the AI space to solid and robust dividend stocks, investors around the world have plenty of reasons to be in selling mode right now. After all, valuations are near all-time highs in most major markets, with Canadian stocks seeing their aggregate valuations surging as well in recent years.
That said, there are some Canadian names which remain undervalued relative to their long-term growth potential. I continue to think Fortis (TSX: FTS) is one such undervalued stock, especially when one compares its current multiple to its forward growth and dividend prospects.
Here’s why I think Fortis could be the best stock in the market for long-term investors looking to put capital to work in 2026 for the long term.
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AI-driven growth will hit the economy unevenly
With whispers that mega-cap tech companies in the U.S. and around the world may be tamping back spending, as the market throws a tantrum over the sheer amount of debt these companies are taking on to chase uncertain returns, I think more investor attention will eventually be paid to companies like Fortis that have steady business models which work without AI, but are supercharged with AI usage over time.
As a regulated utilities provider in Canada, the U.S. and the Caribbean, serving more than three million customers, Fortis’s cash flow profile is about as robust as they come.
But factor in surging demand courtesy of AI for its existing customer cohort, and investors become increasingly giddy about the company’s future growth prospects.
What will Fortis do with all that additional cash flow? History tells us.
More dividends to come
The key reason I continue to point to Fortis as a top stock to own right now isn’t its relatively attractive valuation, nor its growth prospects thanks to AI.
It’s the company’s incredible track record of returning capital to shareholders in the form of share buybacks, but more importantly, dividends.
With a track record of dividend hikes that spans more than five decades, Fortis is simply among the best dividend growth stocks in the market. For investors looking for a passive-income stream that can not only keep up with inflation but potentially beat inflation, this is the stock to pick.
With a current yield of 3.5% and plenty of long-term capital appreciation ahead, Fortis remains my number one pick for investors looking to invest into 2026 and beyond.
