The Canadian Dividend Stock I’d Turn to First When Markets Start Getting Difficult

In a shaky market, Capital Power stands out with a covered dividend and power-demand tailwinds that don’t depend on investor optimism.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published May 27, 8:00 pm EDT

| More on: CPX

Key Points

Capital Power owns diversified power assets, and rising electricity demand supports its long-term business.
Q1 results were mixed, but most 2026 cash flow is contracted or hedged for better stability.
The 4% yield looks more dependable than high-yield traps, but debt and project risks still matter.

When markets get rough, investors usually learn fast. The best dividend stock isn’t always the one with the biggest yield. It’s the one that can keep paying when confidence fades, headlines sour, and share prices swing. That’s why Capital Power (TSX:CPX) could deserve a top spot on a difficult-market watchlist.

A lake in the shape of a solar, wind and energy storage system in the middle of a lush forest as a metaphor for the concept of clean and organic renewable energy. — Source: Getty Images

CPX

Capital Power owns and operates power-generation assets across North America. Its portfolio includes natural gas, renewables, battery storage, and other flexible generation assets. That mix gives it a practical role in today’s market. Canada and the United States need more electricity, not less. Data centres, electrification, industrial growth, and grid reliability all point in the same direction. Power demand looks like a long-term story, even if the stock market has a bad year.

In the first quarter of 2026, Capital Power stock delivered adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $404 million, up $37 million from last year. Yet adjusted funds from operations (FFO) fell to $154 million from $218 million a year earlier. Net income also looked thin, with basic earnings of $0.04 per share. So this isn’t a case where every number screams “buy.”

Still, difficult markets reward cash flow and visibility. Capital Power stock reaffirmed its 2026 guidance, including adjusted EBITDA of $1.565 billion to $1.765 billion and adjusted FFO of $890 million to $1 billion. It also said about three-quarters of 2026 cash flow was already secured through contracts or hedges. That gives investors more certainty than they would get from many cyclical dividend stocks.

Looking ahead

The dividend helps the case. Capital Power stock declared a quarterly common share dividend of $0.69 for the first quarter, giving it an annual yield of 4.1% at writing. That won’t make investors rich overnight, but in a rough market, a reasonable yield backed by contracted power assets can feel far better than a flashy payout with weak support.

The growth plan adds another layer. Capital Power stock wants to grow adjusted FFO per share by 8% to 10% annually through 2030. It also aims to grow in the United States, where power demand from data centres and grid reliability needs could create more opportunity. If management delivers, investors could collect income and still participate in growth.

That said, this isn’t a risk-free utility. Capital Power stock operates in power generation, which can bring commodity exposure, contracting risk, construction risk, and regulatory pressure. Higher debt costs can also hurt, especially when companies need capital to build or buy assets. And after a strong run in the share price, investors should avoid treating it like an automatic bargain.

Bottom line

That’s why I’d turn to it first, but still with a price in mind. A market downturn could give long-term investors a better entry point into a business tied to one of the strongest infrastructure themes in North America: reliable electricity. The dividend offers cash while investors wait, which can be a lot with an even $7,000 investment.

COMPANY	RECENT PRICE	NUMBER OF SHARES	ANNUAL DIVIDEND	ANNUAL TOTAL PAYOUT	FREQUENCY	TOTAL INVESTMENT
CPX	$68.69	101	$2.76	$278.76	Quarterly	$6,937.69

For Canadians building a dividend portfolio, Capital Power stock brings a useful mix. It offers income, exposure to rising power demand, and a business that should matter even when the economy slows.