The defensive nature of utilities is on full display against massive headwinds, primarily caused by geopolitical tensions. Thus far in 2026, the sector is TSX’s third-best performer after energy and basic materials. Surprisingly, industry heavyweights such as Canadian Utilities and Fortis are not leading the surge.
In the current environment, Northland Power (TSX:NPI) and Brookfield Renewable Partners (TSX:BEP.UN) are significantly outperforming the broad market (+6.25%) with staggering year-to-date gains of 35.33% and 30.76%, respectively. Both utility stocks could be headed for a strong 2026, offering safety and upside to income-focused investors.
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Clear direction
Power producer Northland Power owns and operates a diversified portfolio of energy infrastructure assets in Canada, Europe, and across Asia. The assets of this $6.3 billion company include offshore and onshore wind, solar, natural gas and battery energy storage. Since the business is anchored by 95% long-term contracted cash flows, NPI can endure a volatile market.
At $23.95 per share, the dividend yield is 3.01%. Management announced a 40% dividend cut in November 2025 to protect the balance sheet. According to its CEO, Christine Healy, the strategic decision aims to free internal funding for projects that will define clean energy production in the next decade.
In Q4 2025, revenue from energy sales rose 26% year over year to $723 million, while net income climbed 93% to $290 million. The financial results restored investors’ confidence. Healy said NPI has a clear direction moving forward. She expects the five-year strategic plan to double the current operating capacity of 3.5 gigawatts (GW) to seven GW by 2030.
Regarding dividend consistency, NPI hasn’t missed a quarterly payment since 2018. More importantly, the cut brought dividends to a sustainable level. The funds freed by the dividend reduction will support the Hai Long flagship offshore wind project in the Taiwan Strait and in the Baltic Sea off Poland.
Expanded renewable footprint
Brookfield Renewable Partners has a diversified global reach and boasts a strong renewable power platform across five continents. The $14.7 billion renewable power company targets total returns of 12% to 15%, including 5% to 9% annual distribution growth. If you invest today, BEP.UN trades at 47.91 per share and pays a lucrative 4.76% dividend (quarterly payout).
According to management, the diversified operating portfolio generates stable, inflation-linked cash flows. Brookfield Renewable commits to allocating 70% of funds flow from operations (FFO) to distribution payout. Capital deployment to advance high-value projects over the next five years could reach up to $10 billion.
The several large-scale transactions in 2025 expanded its global renewables footprint. Its CEO, Connor Teskey, also noted the robust energy demand growth following multi-decade trends of reindustrialization and electrification, and now the ongoing data centre development: “We believe we are exceptionally well-positioned to capture this significant opportunity and deliver outsized earnings growth in the years to come.”
Strong buys
Expect investors’ interest in power producers in the utilities sector to further heighten if geopolitical tensions persist. Northland Power and Brookfield Renewable Partners are performance engines in 2026, driven by renewable infrastructure. Both utility stocks are strong buys given their lower risk profiles and income-generating potential.
