Are you looking for defensive stocks for your portfolio? Have you considered Canadian utility stocks? Contrary to some investors’ beliefs, these stocks are anything but boring. In contrast, they are reliable dividend payors that have proven to be a resilient and essential part of a portfolio.
In this article, I’ll discuss the utility stock sector and where it currently stands. I’ll also highlight two of my favourite Canadian utility stocks, Enbridge Inc. (TSX: ENB) and Fortis Inc. (TSX: FTS).
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Increasing demand outlook for utilities
One of the most lucrative trends in recent years has been the consistently rising demand for power. And 2026 will likely not be an exception. But what are the factors that are driving this demand and can we count on this trend to continue in 2026?
The Canada Energy Regulator (CER) has high expectations for electricity demand in 2026 and beyod, forecasting electricity to become increasingly central for powering Canadians’ lives. In fact, the federal agency expects electricity demand to grow between 30% and 50% by 2050.
This sentiment is being echoed by what utility companies are experiencing and seeing. Fortis stock is one of North America’s leading utilities stocks. The company also forecasts that electricity will continue to be in high demand as electrification of industries continues in response to climate goals and as demand from sources like data centres surges.
This bullish demand environment is reflected in Fortis’ results. In the fourth quarter of 2025, Fortis reported adjusted earnings per share (EPS) of $0.90. This was 8.4% higher than last year and it came in above expectations. Also, 2026 represented the 52nd consecutive year of dividend increases, further highlighting the strength and stability of this utility stock.
In 2026, Fortis will continue to execute on its new $28.8 billion five-year capital plan. This plan will focus on highly executable and low risk projects. As you can see from Fortis’ stock price graph above, this Canadian utility stock has provided its shareholders with consistently strong returns over many years.
Interest rates support utility stocks
Utility stocks in Canada carry notoriously high debt levels – this is something that comes with this highly defensive and capital-intensive business. Interest rates, therefore, become a significant factor to consider when evaluating Canadian utility stocks.
Today, interest rates remain on the low end compared to history. This is clearly good for utility stocks. Enbridge and Fortis are benefitting from this interest rate environment. In its latest meeting, the Bank of Canada held interest rates steady at 2.25%. This decision was the Bank’s response to conflicting forces – signs of weakness in the Canadian economy on the one hand and the inflationary pressure of surging oil prices on the other.
For Fortis and Enbridge, these low interest rates are good. As you can see from Enbridge’s stock price graph above, Enbridge stock has been benefiting from low interest rates and a strong demand environment for many years. One of Enbridge’s main goals in recent years has been to manage its debt load. Currently, Enbridge has a debt-to-total capitalization ratio of 62%, and its debt-to-earnings ratio stands at 4.8 times. This heavy debt load is funding its major capital investment plans, which are in response to strong demand in all of its segments.
These projects are essential to meet the rising energy demand.
The bottom line
Utility stocks in Canada and North America are an attractive sector for investors to focus on in 2026. This is due to a very bullish outlook for utilities, combined with a constructive interest rate environment. Fortis and Enbridge stocks are two of the premier names in this space. I would recommend them, as macro-economic risks are rising, and defensive utility stocks will likely provide strong and steady returns once again this year.
