When it comes to finding the best stocks that investors get excited to buy, utility stocks are rarely at the top of that list.
In fact, most investors see utility stocks for exactly what they are. Boring, slow-growing businesses that are better for income than they are for capital appreciation. And compared to tech stocks, energy producers, or other high-growth names, that’s often true.
But that’s also exactly why they’re worth a second look right now, because in a market where volatility remains elevated, the direction interest rates could go is still uncertain, and investors are increasingly looking for businesses they can actually hold with confidence. These boring yet ultra-reliable businesses can offer investors a ton of value.
That’s especially true today, not just because utility stocks are defensive, but because many of them also have long-term growth drivers that make them businesses you can confidently buy and hold for years.
So, with that in mind, if you’re looking to boost your income, shore up your portfolio or both, here are three utility stocks that you can comfortably buy now and hold for the long haul with confidence.
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One of the best utility stocks to buy for the core of your portfolio
If you want the clearest example of why boring utility stocks can still be so attractive, Fortis (TSX: FTS), is one of the best stocks to consider.
Fortis is a classic utility stock that operates regulated electric and natural gas utilities, provides essential services, and generates highly predictable cash flow regardless of what’s happening in the broader economy.
That’s why massive, diversified utility stocks like Fortis are so compelling as long-term investments.
Regardless of the economic environment, people still need electricity and heat. And because Fortis operates regulated assets, its earnings are far more predictable than almost any other company.
That’s what has allowed it to consistently grow its dividend every year for more than half a century now.
However, what also makes Fortis so compelling right now is that as the electrification trend continues and power demand rises over time, Fortis still has room to grow its rate base and continue expanding earnings steadily for decades to come.
So, although it’s a stock many investors would call boring, that’s the point. It’s the perfect low-maintenance, reliable stock that provides stability, income, and a business model that’s easy to trust for the long haul.
Two high-quality stocks with utility operations
In addition to Fortis, another high-quality Canadian stock that investors can consider which offers exposure to the reliability of utilities with a bit more growth potential is AltaGas (TSX: ALA).
AltaGas still gives investors some of the same defensive characteristics they want from a utility, but it also offers more growth potential through its midstream and export business.
So, its utility operations provide the stable, predictable cash flow that helps reduce risk, while its midstream segment gives it exposure to long-term growth tied to Canadian energy exports.
And that growth potential is significant over the long haul, especially as Canada continues working to move more energy to the West Coast and sell into Asian markets.
Meanwhile, Brookfield Infrastructure Partners (TSX: BIP.UN), is another reliable defensive growth stock with a significant utility segment, in addition to a bunch of reliable infrastructure assets all over the world.
So, although it’s not a traditional utility stock, it owns the same kind of essential infrastructure assets that make utility stocks so attractive in the first place.
That’s crucial because instead of relying on one market or one industry, it generates cash flow from multiple sectors across the global economy. On top of that, it actively recycles capital by selling mature assets and reinvesting in higher-growth opportunities.
That’s what makes Brookfield so compelling: you get the same essential, infrastructure-style cash flow that makes utility stocks attractive, but with far more diversification and more long-term growth potential.
That’s why Brookfield, AltaGas, and Fortis are some of the best stocks to buy now. Because in a market where stability, income, and long-term infrastructure growth are all becoming more important, boring yet reliable stocks like these can be some of the smartest places to look for long-term investors.
