Canadian utility stocks are entering 2026 with a favourable backdrop, supported by rising electricity demand from electrification, data-centre growth, and ongoing energy-transition initiatives. This steady structural demand helps reinforce the sector’s reputation for stability, especially as provinces invest in stronger, more modern grids.
At the same time, major utilities are ramping up capital-expenditure programs to upgrade infrastructure, expand transmission capacity, and diversify into cleaner generation and energy-storage projects. These long-term investments are increasing regulated rate bases, which can translate into more predictable earnings and sustained dividend growth.
Income-focused investors continue to favour the sector for its resilience. Regulated business models, reliable cash flows, and long histories of dividend payments make many Canadian utilities strong portfolio anchors during periods of economic uncertainty or market volatility.
However, investors should also watch emerging risks, such as higher borrowing costs, regulatory shifts, and the financial impact of sizable capital programs. Despite these considerations, the overall outlook remains constructive with several leading names standing out as compelling picks.
Interested in finding the best Canadian utility stocks to add to your investment portfolio? Keep reading to find out!
Related: List of stocks in the TSX utility sector
What are utility stocks?
Utility stocks are the publicly traded shares of companies involved in the production and distribution of essential infrastructure services to the public.
They include, but are not limited to, water, natural gas, and electricity companies. These companies keep the taps in your house running, your lights on, your stove working, and provide heating in the winter.
Compared with the other 11 major stock market sectors, utility stocks have a few traits that make them traditionally defensive investments. These include:
- Lower-than-average volatility compared with other sectors, and a lower-than-average sensitivity to the overall market’s movement.
- Evergreen demand due to the essential nature of their services even during a recession, compared with more cyclical sectors like consumer discretionary or information technology.
- Consistent and more predictable earnings and dividend yields because the rates they charge can be regulated by the government or contractually guaranteed.
One weakness of utility stocks is their sensitivity to changes in interest rates. Many utility companies carry high debt loads due to their need to constantly maintain and upgrade infrastructure. This leads to a higher-than-average degree of capital expenditures. Rising interest rates make it harder for utility companies to access debt financing, which can hurt their margins and earnings.
Top Canadian utility stocks
Utility stocks in Canada can represent all market capitalizations, whether small-, mid-, or large-cap. The most popular Canadian utility stocks tend to be blue-chip ones with larger market capitalizations. These companies usually have an established track record of profitable operations and many years of consecutive dividend increases.
| Company | Description |
| Fortis (TSX:FTS) | Fortis is an electric and gas utility company operating across Canada, the U.S., and the Caribbean. |
| Emera (TSX:EMA) | Emera is a utility company engaged in the generation, transmission, and distribution of electricity worldwide. |
| Canadian Utilities (TSX:CU) | Canadian Utilities is an electric, natural gas, and retail energy utility company operating worldwide. |
Fortis Inc.
Fortis (TSX:FTS) is one of Canada’s largest utility holding companies and a stalwart in the realm of Canadian dividend knights, having increased its dividend for 52 consecutive years. With a current dividend yield of approximately 3.49%, Fortis stands alongside Canadian Utilities as a dividend king.
Fortis continues to stand out for its predictable growth strategy, steady cash flow expansion, and long track record of dividend reliability. The company’s $29 billion capital program is set to boost its rate base by roughly 7% annually over the next five years, supporting planned dividend increases of 4–6% through 2030. Strong demand from AI-driven data-centre expansion further reinforces the utility’s long-term earnings outlook, helping justify its slight valuation premium.
With shares up more than 20% in 2025, Fortis is benefiting from lower interest rates, a robust project pipeline, and manageable debt costs. Its low-risk growth model, combined with a 3.53% yield and rising cash flows, positions the company well for investors seeking stability and dependable income in an uncertain market environment.
Additionally, Fortis has expanded its customer base, now serving over 3.7 million clients, thanks to strategic acquisitions in the Caribbean and North America. The company’s financial performance remains strong, driven by its stable recurring revenues from its core utility operations, which continue to span across Canada and into the Caribbean.
Emera Inc.
Emera (TSX:EMA) operates through multiple different subsidiaries to generate, transmit, and distribute electricity for clients across Canada, the U.S., and the Caribbean. It operates through segments dedicated to Canadian electric utilities, non-Canadian electric utilities, and gas utilities and infrastructure.
Emera Inc., a key player in the Canadian energy sector, is recognized for its consistent dividend performance and strong dividend growth, making it a favorite among income-focused investors. The company’s power generation sources include coal-fired, natural gas and oil, hydroelectric, wind, solar, and biomass power plants. Additionally, Emera is involved in the purchase, distribution, and sale of natural gas and liquefied natural gas (LNG).
Emera offers a low-risk profile, steady income, and strong visibility into future earnings, making it especially appealing to conservative, long-term investors. The company’s new five-year, $20 billion capital plan is set to drive 7–8% annual rate-base growth through 2030, with a heavy focus on grid modernization and infrastructure upgrades in Florida. Its 4.3% dividend yield remains highly sustainable, supported by a healthier payout ratio and a regulated business model that delivers stable cash flow.
As a regulated utility providing essential services, Emera benefits from consistent demand in all economic conditions, enabling predictable revenue and ongoing dividend increases. The combination of steady growth, defensiveness, and a commitment to investing in future cash-flow expansion positions Emera as one of the strongest dividend stocks for passive-income investors seeking reliability over decades.
Canadian Utilities Ltd.
Canadian Utilities (TSX:CU) operates through three segments to deliver electricity, natural gas, and retail energy services to a worldwide base of clients. This includes the provision of electricity, natural gas, infrastructure such as pipelines, compressor sites, storage facilities, delivery points, and industrial water solutions.
Canadian Utilities is one of the most dependable dividend-growth stocks in Canada, built on a foundation of regulated, contract-backed earnings from essential electricity and natural gas services. Its rate-regulated operations provide predictable, inflation-linked returns, allowing the company to steadily grow its dividend while continuing to invest in long-term infrastructure.
Although its growth rate is more modest than some peers, the trade-off is exceptional reliability, highlighted by Canada’s longest dividend-growth streak at more than 50 years. With a reasonable valuation at 16.9 times forward earnings, a 4.4% yield, and shares trading near a 12-month high, Canadian Utilities remains a compelling option for TFSA investors seeking a long-term, low-risk income stock.
Investing in international utility stocks
Utility stocks aren’t just found in the Canadian market. Investors seeking to diversify further can also look for utility stocks in the following geographies:
- The U.S. stock market, which includes companies listed on the New York Stock Exchange and NASDAQ.
- International developed markets, which includes Europe, the U.K., Australia, and Japan.
- International emerging markets, which includes Asia, Russia, Africa, South America, and the Middle East.
Keep in mind that purchasing international utility stocks might require you to convert currency. Investors can avoid this using Canadian Depository Receipts (CDRs) or by buying an exchange-traded fund (ETF) that holds international utility stocks.
Are utility stocks a good investment?
The answer to this question depends on your investment objectives, risk tolerance, and time horizon. In general, utility stocks are good investments for investors seeking lower volatility and higher than average dividend payments. This often includes investors who are on the verge of retiring or already retired. For these investors, ensuring safety of principle and a steady stream of consistent income is more important than ensuring absolute growth at all costs.
However, younger investors who are willing to tolerate more risk in exchange for higher possible returns may find utility stocks to be a bit boring during bull markets. In these scenarios, they might underperform higher-growth sectors such as consumer cyclicals or information technology. Despite their high dividend yields, investors should be careful to not use utility stocks as a replacement for low risk bonds as they still have market risk and can fall during a crash.
Regardless, utility stocks are an easy way for investors to start investing in the Canadian stock market. Because they are mostly large-cap blue chip stocks, they can be a useful way for investors to learn the ins and outs of how to hold a stock. A good way to use utility stocks is as the core of a defensive low volatility portfolio. With utility stocks, reinvesting their periodic dividend payments is key, as the compounded returns will greatly enhance long-term total returns.