Canada’s Inflation Rate Just Jumped: 2 Stocks That Look Built for it

Inflation is flaring again, and these two utility stocks let investors lean into essential electricity demand instead of chasing oil prices.

Amy Legate-Wolfe

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. Before joining Motley Fool Canada, she 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. 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 June 3, 4:40 pm EDT

| More on: AQNCPX

Key Points

Capital Power is growing with rising power demand and more long-term contracted revenue, supporting a 3.8% yield.
Algonquin is a regulated-utility turnaround with a reset dividend near 4.3%, but trust and debt risks still linger.
Both can pay through inflation shocks, yet rate sensitivity and execution will decide how defensive they really are.

10 stocks we like better than Algonquin Power & Utilities

We all thought we were out of the woods. Inflation looked calmer until April arrived. Canada’s annual inflation rate jumped to 2.8% in April, up from 2.4% in March. Energy did most of the pushing. Gasoline prices rose 28.6%, while energy prices climbed 19.2%. That doesn’t mean inflation has roared back everywhere. Excluding gasoline, prices rose 2%. Still, the message looks clear enough. Costs can flare up fast, especially when fuel, power, and basic services come under pressure.

That’s why Capital Power (TSX:CPX) and Algonquin Power & Utilities (TSX:AQN) deserve attention now. Both operate in electricity and utility markets. Both connect to services people and businesses need no matter what happens to the economy. And both give investors a way to watch inflation from the essential-services side, rather than chasing short-term commodity swings.

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CPX

Capital Power looks relevant because electricity demand keeps climbing. Data centres, electrification, and industrial growth need dependable power. Capital Power owns power-generation assets across North America, including natural gas, renewables, and storage. It doesn’t run like a plain regulated utility, but it can benefit when reliable electricity becomes more valuable.

The latest quarter showed that strength. In the first quarter of 2026, Capital Power generated revenue and other income of $1.21 billion, up from $988 million last year. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose to $404 million from $367 million. Electricity generation also increased to 11,468 gigawatt hours from 9,555. Those numbers support the idea that this company sits close to a powerful long-term trend.

Capital Power also added more contracted revenue. It extended the Arlington Valley summer tolling agreement through 2038, adding seven years of contracted revenue and about US$70 million in incremental annual capacity payments by 2032 compared with 2025. That kind of visibility matters when inflation and interest rates make investors nervous.

The dividend helps, too. Capital Power pays $0.691 per quarter, or $2.764 annually, yielding near 3.8% at writing. That income won’t beat inflation on its own, but it can support total returns while the company grows.

AQN

Algonquin stock brings a more traditional utility angle, though with more baggage. The company owns regulated water, gas, and electric utility assets under its Liberty banner. That makes it relevant during inflationary periods, as regulated utilities can often recover prudent costs through rate cases. Customers still need heat, water, and electricity, even when budgets tighten.

Algonquin stock’s first-quarter 2026 results showed progress, but not perfection. Net earnings came in at US$83.1 million, or US$0.11 per share. Adjusted net earnings reached US$99.6 million, or US$0.13 per share. Those figures slipped from last year, but the bigger story lies in the reset. Management has pushed a “Back to Basics” strategy focused on regulated utilities, financial discipline, and steadier operations.

That strategy matters because Algonquin stock burned investors before. Dividend cuts, debt worries, and renewable asset sales damaged trust. So Algonquin stock needs to earn its way back. The company did receive orders tied to rate cases in Missouri, California, and Massachusetts, and it filed a settlement agreement in Arizona. Those steps can help support more predictable earnings.

The dividend now looks more manageable after the painful reset. Algonquin stock declared a quarterly common share dividend of US$0.065, with a forward yield of around 4.3%. That’s income, but investors shouldn’t ignore the risk. This remains a turnaround story.

Bottom line

Together, CPX and Algonquin stock offer two inflation-aware ideas. Capital Power gives investors growth tied to rising electricity demand. Algonquin stock gives investors regulated utility exposure with recovery potential. And together, even $7,000 in each can bring in strong income.