What types of stocks pay reliable dividends in bull or bear markets?
Going by historical data, the answer would seem to be utility stocks.
Utilities are among the most reliable businesses on earth, supplying essential services (e.g., heat, light and water) while often serving as legal monopolies in their service areas.
Most people would rather sell their cars than cut out services like heat and light. This fact makes utility stocks very recession-resistant. Many Canadian utilities have been paying dividends consistently for several decades. In this article, I’ll explore one Canadian utility that has raised its dividend consistently even during market drops.

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Fortis
Fortis (TSX: FTS) is a Newfoundland-based utility company that has operations across Canada, in the U.S., and in the Caribbean. It boasts $79 billion worth of assets, 3.5 million customers, and nine distinct utility operations. The company has averaged a 10.5% total return (annualized) over the last 10 years. As a utility, it has the revenue and (to a lesser extent) earnings stability required to deliver a steady dividend over time. As I will show momentarily, the company has actually delivered a dividend performance that is a little better than “steady.”
Dividend track record
Fortis stock is perhaps known for its stellar dividend track record. The company has raised its dividend every year for the last 52 years. This uninterrupted 52-year dividend-growth streak is one of the best among TSX stocks. Over the last five years, Fortis’s dividend has grown at a rate of 4.85% per year. The five rate of growth has been slower than in past years, but still substantial. If history is any indicator, those buying Fortis shares today will enjoy a higher yield-on-cost in the future.
Speaking of yield…
Fortis stock boasts a 3.4% dividend yield at today’s price. This is significantly above average by the standards of TSX stocks as a whole. So, if you’re an income-hungry investor, Fortis stock may deliver what you’re looking for: a high-ish yield and a growing dividend.
Sources of future growth
Having looked at Fortis’s historical dividend performance, it’s time to evaluate whether that performance can continue into the future. There are two sets of factors we can look at here: industry-wide tendencies and company specific factors.
First, the industry wide advantages.
Regulated utilities have an advantage when it comes to paying stable dividends in bear markets, because they supply essential services and enjoy high market share. As mentioned previously, people would rather sell their cars than cut out heat, light, and water. That fact makes utilities very stable and reliable during market downturns.
Second, Fortis’s company specific advantages.
Fortis has some advantages over other Canadian utilities — a group of stocks it has outperformed over the long term. First, it is pretty disciplined financially, never paying out more than it earns in dividends. Second, it has invested significantly in growth over the years. The company acquired a portfolio of U.S. and Caribbean utilities over several decades. More recently, it has been undertaking a capital expenditure project that will increase its rate base by 6.5% compound annual growth rate over five years. These facts argue that Fortis will be able to keep growing and raising its dividend for the foreseeable future.