Utility stocks have traditionally been viewed as conservative investments, known for their stability rather than their growth potential. Their slow but steady performance and defensive characteristics have often made them less exciting compared to other sectors. However, that perception is changing.
Utility companies are becoming critical infrastructure providers with significant growth prospects. The ongoing shift toward electrification, global energy transition, and surging demand for electricity from artificial intelligence (AI) data centres are creating significant long-term opportunities for utility companies.
At the same time, utility stocks are solid dividend payers. Their regulated business models generate stable, predictable cash flows, enabling them to pay and increase dividends year after year.
This combination of dependable income and improving growth prospects makes utility stocks compelling investments offering strong total returns.
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Canadian utility stock #1: Fortis
Fortis (TSX:FTS) is one of the top Canadian utility stocks headed for a strong 2026. Moreover, the momentum in its business will likely be sustained in the years ahead. Its stock has gained about 16% year-to-date, and the upward trajectory is likely to sustain.
Fortis operates regulated electricity and natural gas transmission and distribution networks that serve customers across Canada, the U.S., and the Caribbean. Nearly all of Fortis’s earnings come from regulated operations, giving the company highly predictable cash flows. This stability allows Fortis to continue paying and increasing its dividends regardless of broader market conditions, while also funding major infrastructure investments.
Fortis increased its dividend for 52 years in a row. Moreover, this growth streak is likely to continue as Fortis expands its regulated asset base, which will drive its earnings.
To support growth, Fortis plans to invest approximately $28.8 billion over the next five years in regulated infrastructure projects. These investments are expected to increase its regulated asset base by roughly 7% annually. As a result, Fortis projects annual dividend growth of 4% to 6% over the same period, supported by higher earnings.
Fortis is also well-positioned to benefit from structural demand trends across the utility sector. Growing electricity demand driven by ongoing electrification, manufacturing, and the rapid expansion of data centres is creating significant opportunities for utilities. With continued investments in grid modernization and energy networks, Fortis appears well-equipped to capitalize on these trends and deliver strong growth in 2026 and beyond.
Canadian utility stock #2: Emera
Emera (TSX:EMA) is another attractive utility stock poised to deliver strong growth in 2026. It will continue to benefit from rising demand for electricity and natural gas, driven by population growth and evolving energy markets.
As the majority of its earnings come from regulated electric and natural gas utilities, Emera has been able to reward shareholders through uncertain periods and higher interest rates. Notably, the Canadian utility company has increased its dividend for 19 consecutive years, making it one of the most dependable dividend-growth stocks on the TSX.
Looking ahead, Emera plans to invest more than $20 billion by 2030 to expand transmission networks, integrate renewable energy sources, and strengthen its natural gas infrastructure. These strategic investments are expected to drive annual rate-base growth of 7% to 8%, supporting long-term earnings growth of 5% to 7%. As earnings continue to rise, the company will be able to maintain its dividend growth.
Further, as major capital projects are completed and added to its regulated rate base, Emera is likely to generate steady earnings growth over the coming years. This will drive its dividend and share price in 2026 and beyond.
