In a market filled with volatility, Canadian utility stocks are known for their stability, predictable cash flows, and dependable dividends. Among them, Fortis (TSX:FTS) has long been considered a gold standard. But how does it truly compare to peers like Canadian Utilities (TSX:CU), Brookfield Infrastructure Corporation (TSX:BIPC), Brookfield Renewable Corporation (TSX:BEPC), Capital Power (TSX:CPX), and Hydro One (TSX:H)? The answer reveals important distinctions in income reliability, growth potential, and risk.
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Fortis: The benchmark for stability and dividends
Fortis has built its reputation on consistency. With approximately 99% of its assets regulated and a diversified footprint across North America and the Caribbean, it delivers highly predictable earnings.
What truly sets Fortis apart is its dividend track record – more than five decades of consecutive increases – paired with a targeted annual dividend growth rate of 4–6% through 2030. This combination of reliability and moderate growth makes it a cornerstone holding for income-focused investors.
Compared to peers, Fortis also benefits from geographic diversification and scale. It is larger than Canadian Utilities and less regionally concentrated than Hydro One, which operates primarily in Ontario.
However, stability comes at a cost: slower capital appreciation. In certain environments, Fortis could lag higher-growth utility or infrastructure names, making it better suited for conservative investors than those seeking aggressive returns.
Traditional utilities: Canadian Utilities and Hydro One
Canadian Utilities shares Fortis’s income appeal, boasting a slightly higher dividend yield at about 3.7% versus Fortis’s 3.2%. However, Canadian Utilities’s dividend growth has been lower with a five-year growth rate of 1% versus Fortis’s 5.1%.
Then, there’s Hydro One. As a pure-play regulated electric utility, it generates nearly all its cash flow from stable transmission and distribution operations. In recent years, Hydro One has delivered stronger capital appreciation and earnings growth, supported by steady rate-base expansion and infrastructure investment, as well as a shift of capital to defensive names, bidding up the stock.
As of writing, Hydro One trades at a price-to-earnings (P/E) ratio of about 26, compared to Canadian Utilities’s P/E of about 20, and Fortis’s 19.
Growth-oriented alternatives: Brookfield and Capital Power
For investors willing to sacrifice some stability for higher long-term growth potential, Brookfield Infrastructure Corporation and Brookfield Renewable Corporation could be compelling alternatives. These companies focus on global infrastructure and renewable energy assets, respectively, benefiting from long-term trends like decarbonization and infrastructure expansion.
Unlike Fortis, which emphasizes regulated returns, Brookfield entities actively pursue acquisitions and capital recycling strategies. This introduces more variability but also higher upside potential for the long haul.
Capital Power occupies a middle ground. As a power generator transitioning toward cleaner energy, it offers stronger growth prospects than traditional utilities but with greater exposure to market forces and commodity dynamics. This makes it inherently riskier than Fortis’s regulated model.
Investor takeaway: Where Fortis stands
Fortis remains the benchmark for conservative utility investing in Canada. Its unmatched dividend history, regulated business model, and geographic diversification make it one of the safest long-term holdings in the sector.
However, it is not the highest-growth option. Investors seeking capital appreciation may prefer Brookfield’s infrastructure and renewable platforms, especially on market corrections, while those seeking higher yield might consider Canadian Utilities.
Ultimately, Fortis is a worthy core holding candidate for a diversified portfolio: dependable, resilient, and built for compounding over decades.
