When investors look for the best Canadian stocks to buy, they often focus on companies with exciting growth potential or a major catalyst that could send their share prices soaring.
However, some of the best long-term investments are companies that quietly produce reliable cash flow and continue growing regardless of what happens with the economy.
That’s exactly what makes Canadian Utilities (TSX: CU) such an attractive stock. It’s not a company that receives a tonne of attention, nor is it likely to dominate conversations among investors. Yet that lack of excitement is also part of its appeal.
Canadian Utilities owns essential infrastructure, generates highly predictable earnings and has increased its dividend for 54 consecutive years, the longest streak of any publicly traded Canadian company.
So, while the stock certainly won’t be the fastest-growing investment you own, it could be one of the most reliable.
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A business designed to keep growing quietly
Canadian Utilities owns and operates electricity and natural gas infrastructure in Canada and Australia, including transmission, distribution and generation assets.
These are essential assets that homes and businesses rely on every day, regardless of whether the economy is booming or in a recession. Furthermore, because most of Canadian Utilities’ earnings come from regulated operations, its cash flow is considerably more predictable than that of companies exposed directly to commodity prices or consumer spending.
That stability was evident again in the second quarter when adjusted earnings increased 16% year over year to $140 million.
However, Canadian Utilities isn’t just reliable. It also has considerable long-term growth potential thanks to its massive capital plan. In fact, the company invested $403 million in the second quarter, with 98% of that capital going toward regulated utilities.
In total, Canadian Utilities plans to invest roughly $12 billion between 2026 and 2030, which should help grow its rate base by approximately 6.9% annually to $23.2 billion by the end of the decade.
That’s important because as the Canadian dividend stock builds new infrastructure and puts those assets into service, it expands the base on which it can earn regulated returns, helping to grow its earnings and cash flow over time.
One of Canada’s most reliable dividend stocks
Of course, Canadian Utilities’ dividend-growth record is one of the clearest signs of just how reliable its underlying business has been.
The company has increased its payout every year for 54 straight years, surviving multiple recessions, oil crashes, periods of high inflation and rapidly changing interest rates along the way.
At its current price of roughly $50, Canadian Utilities offers a dividend yield of approximately 3.7%.
It’s worth noting, though, that the company’s latest dividend increase was only 1%. So, investors shouldn’t buy the stock expecting explosive dividend growth.
Furthermore, after gaining roughly 34% over the last year, Canadian Utilities isn’t exactly cheap. It currently trades at roughly 18.7 times its forward earnings, above its 10-year average of 16.2 times.
Higher interest rates can also make utilities less attractive and increase financing costs, while regulatory decisions and the execution of its massive capital plan will remain important risks to watch.
Nevertheless, Canadian Utilities isn’t supposed to be the stock that doubles overnight. Its job is to invest in essential assets, generate predictable cash flow, steadily increase its dividend and repeat that process year after year.
That’s why, if you’re looking for a dependable stock you can buy and hold for years with confidence, Canadian Utilities is easily one of the best to consider.
