There’s no question that the best dividend stocks to buy for reliable income are businesses that offer essential services.
And it doesn’t get much more essential than electricity. Even a short power outage can disrupt businesses, infrastructure, and daily life, which is why maintaining a stable and reliable power grid is so important.
That’s why companies that generate electricity and are backed by long-term contracts, such as Capital Power (TSX:CPX), can be some of the best stocks to buy for immediate income.
Source: Getty Images
How this dividend stock generates consistent and predictable cash flow
Capital Power is an independent power producer with a diversified portfolio of electricity generation assets. But the key isn’t how it generates power; it’s how it gets paid.
More than 75% of Capital Power’s cash flows are secured through long-term power purchase agreements and capacity contracts. These contracts are typically with governments, utilities, and large investment-grade counterparties. That means a significant portion of the company’s revenue is effectively locked in ahead of time, giving it a tonne of stability.
In fact, in many cases, Capital Power isn’t just paid for the electricity it produces. It also earns capacity payments simply for keeping its power generation assets available to the grid.
That’s crucial because power grids require a constant and reliable supply of electricity. If supply drops unexpectedly, it can lead to outages that disrupt entire regions. Because of that, grid operators are willing to pay companies like Capital Power to ensure their facilities are available when needed, even if they’re not always producing at full capacity.
That structure makes a large portion of Capital Power’s revenue predictable and less dependent on short-term fluctuations in energy demand or pricing, which is why it’s such a reliable dividend stock for long-term investors.
Why the dividend is so sustainable
The stability of Capital Power’s business model consistently shows up in its numbers as well, proving why it’s a top pick among TSX stocks for immediate income.
For example, in the first quarter of 2026, the dividend stock reported revenue of $1.2 billion, beating expectations. At the same time, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 9.2% year over year to $404 million, showing that the core business continues to grow.
And while earnings per share came in at $0.04 compared to expectations of $0.53, that difference was largely driven by transaction and financing costs tied to recent U.S. expansion activity, not weakness in the underlying business.
In fact, the combination of rising revenue and higher EBITDA shows that operations remain solid. Plus, management reaffirmed its full-year 2026 adjusted EBITDA guidance of $1.565 billion to $1.765 billion, providing further confidence that the business is continuing to perform as expected.
And this is where the dividend comes into the picture. Even with the shares trading near their 52-week high, Capital Power still yields roughly 4% today. And on top of the immediate income you can start earning when you buy the stock, it has also increased that dividend for 12 consecutive years, and continues to target 2% to 4% annual increases going forward.
Furthermore, since the stock targets a payout ratio of its funds from operations of 50% or less, the dividend is intentionally kept highly safe and sustainable.
So, if you’re a dividend investor looking for a high-quality long-term investment that also starts to pay you immediately, Capital Power is undoubtedly one of the top picks among Canadian stocks.
