The Utilities Play: Boring, Reliable, and Suddenly Profitable

This top utility stock is reasonably valued today. Investors would enjoy a nice starting yield of about 5%, growing income, and long-term upside.

Kay Ng

Author Bio Kay graduated from the University of British Columbia with a Bachelor of Science in Computer Science and furthered her studies in financial markets, finance, and financial accounting. She began investing in dividend stocks in 2008, turning an early interest into a lasting passion. Over the years, Kay has refined her investment approach to focus on high-quality businesses, using fundamental analysis and valuation to identify long-term investment opportunities. Her investment research and articles have been featured in The Motley Fool, Sure Dividend, and Seeking Alpha. Outside of investing, Kay enjoys playing the piano, from popular songs learned by ear to challenging classical compositions. Her favourites include Fantaisie-Impromptu by Frédéric Chopin and La Campanella by Franz Liszt. Education Bachelor of Science (BSc) in Computer Science, University of British Columbia Further studies in financial markets, finance, and financial accounting Areas of Expertise Dividend stocks, fundamental analysis, company valuation, quality investing, long-term investing, business fundamentals, and identifying investment opportunities in high-quality companies. Social Media Profiles LinkedIn Favorite Investment Quotes “The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.” — Benjamin Graham “A market downturn doesn’t bother us. It is an opportunity to increase our ownership of great companies with great management at good prices.” — Warren Buffett

Published February 8, 9:30 am EST

Utilities have long carried an unfair reputation in the stock market. They’re often dismissed as slow, dull, and lacking upside — hardly the centre of exciting investment stories.

But that perception misses the point. Utilities are built on predictability, regulated cash flows, and essential services, which makes them some of the most reliable businesses investors can own. That reliability, over time, quietly turns into something more appealing: meaningful profitability.

For conservative investors, income seekers, and anyone looking to stabilize a diversified portfolio, utilities deserve a closer look. What they lack in flash, they often make up for in steady compounding and growing income over time.

A meter measures energy use. — Source: Getty Images

A simple way to invest in the sector

One straightforward way to gain exposure to Canadian utilities is through an exchange-traded fund (ETF) like iShares S&P/TSX Capped Utilities Index ETF (TSX: XUT). Over the past decade, XUT delivered a compound annual growth rate of roughly 9%, turning a $10,000 investment into about $23,610. That may not rival high-growth stocks, but it’s a strong outcome for a traditionally defensive sector.

The ETF currently holds 14 Canadian utility companies, with returns heavily influenced by its top five holdings, which together account for about 69% of the fund.

These include the following:

Fortis: About 23% of the fund
Brookfield Infrastructure Partners (TSX: BIP.UN): 14%
Emera: 13%,
Hydro One: 11%
AltaGas: 8%

Each brings a blend of defensiveness and resilience from regulated assets, long-term contracts, and inflation-linked cash flows — ingredients that support dependable returns across market cycles.

Brookfield Infrastructure Partners: A prime example

Among these top holdings, Brookfield Infrastructure Partners appears to be particularly compelling. Analysts currently see it trading at an estimated 13% discount to intrinsic value, making it the most attractively valued name in the group.

BIP has delivered an impressive compound annual growth rate of about 14% over the past decade, growing a $10,000 investment into roughly $38,220.

Recently, the company reported solid fourth-quarter and full-year 2025 results and increased its cash distribution by 5.8%, marking its 17th consecutive year of distribution growth. That growth remains well covered, with a 2025 payout ratio of 66% of funds from operations (FFO), consistent with its long-term average of 70% from 2016 to 2025.

The company’s strength lies in its diversified global portfolio of utilities, transport, midstream, and data infrastructure assets. Embedded inflation escalators, GDP-linked volume growth, and reinvestment of cash flows are expected to drive organic FFO growth of 6–9% annually.

From “boring” to powerful compounding

Brookfield Infrastructure Partners also actively recycles capital — selling mature assets and redeploying funds into higher-return opportunities.

In 2025, it achieved its US$3 billion capital recycling target and aims to repeat that figure this year. Meanwhile, it ended the year with a record capital backlog of nearly US$9.2 billion, with data infrastructure accounting for US$7.1 billion of the backlog, representing a significant growth driver as the mega trend of digitalization and AI investments accelerates.

For long-term investors, this creates a powerful setup. Those who bought Brookfield Infrastructure Partners a decade ago started with a yield of around 5.5% and would now enjoy a yield on cost exceeding 10%.

Investors only need to focus on when to buy the stock. (Forget about selling.) Today, with units trading below $50 and yielding about 5%, patient investors can still position themselves for solid long-term returns and growing income that outpaces inflation — especially by adding on market dips.

Investor takeaway

Utilities may never be exciting in the traditional sense, but that’s exactly their advantage. Through stable cash flows, disciplined capital allocation, and steady dividend growth, the sector — led by names like Brookfield Infrastructure Partners — shows how “boring” investments can quietly become very profitable over time.