Utility shares aren’t speculated to be thrilling, however on occasion, the market underestimates simply how a lot compounding energy there’s in boring, regulated money flows. This 12 months, a handful of Canadian names look low-cost sufficient, and have sufficient seen development, to quietly outpace the TSX.
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Fortis
Considered one of my perennial long-term utility inventory picks I proceed to view as considered one of the very best dividend shares available in the market proper now could be Fortis (TSX:FTS).
Fortis is doing precisely what you need from a core utility holding. That’s, rising its fee base at a mid‑single‑digit clip whereas steadily reducing threat.
The corporate simply reported adjusted earnings of $3.53 per share for 2025, up 7.6% from 2024, supported by regulated fee base growth and operational enhancements. Administration has laid out a C$28.8 billion 5‑12 months capital plan that underpins roughly 7% annual fee base development, giving traders unusually clear visibility on future earnings. On the identical time, Fortis has been quietly de‑risking its steadiness sheet, whereas sustaining strong funding‑grade credit score scores and an (funds from operations) FFO‑to‑debt profile that’s trending stronger.
Put it collectively, and you’ve got a utility rising EPS across the mid‑single digits. This comes with a close to‑3.5% yield and 50‑12 months‑plus dividend‑development streak that has already crushed the broader Canadian market over 1, 5, 10, and 20 years. If traders rotate again into defensives as volatility returns, that mixture of yield, development, and draw back safety provides Fortis a really actual shot at beating the TSX once more in 2026.
Hydro One
Hydro One (TSX:H) used to commerce like a sleepy bond proxy, however the fundamentals now argue for higher‑than‑“bond‑like” returns.
The corporate controls the spine transmission and distribution community in Ontario, giving it a quasi‑monopoly place in a province that continues to draw folks and companies. Charge base development is being pushed by the necessity to change growing old infrastructure and spend money on grid modernization, and administration explicitly expects to fund this development with out issuing fairness, which ought to help per‑share earnings energy.
The regulatory framework is enticing. The Ontario Power Board has accepted a 60/40 debt‑to‑fairness construction and an allowed return on fairness of 9.4% by way of 2027, locking in wholesome, predictable returns on capital for a number of years.
On prime of that, Hydro One is leaning into ESG tailwinds, reducing Scope 1 emissions by roughly 24% from its 2018 baseline and concentrating on a 30% discount by 2030. With a strong steadiness sheet, seen mid‑single‑digit earnings development, and a rising dividend yield within the 2.3% vary, traders are getting a sturdy complete‑return profile that might simply edge out a extra cyclical, earnings‑unstable TSX this 12 months.
Canadian Utilities
Canadian Utilities (TSX:CU) is the stodgy Alberta‑based mostly identify traders like to ignore, which is strictly why the inventory’s setup seems compelling at present.
The inventory trades at a modest mid‑teenagers worth‑to‑earnings a number of with an almost 4% dividend yield, supported by largely regulated operations in electrical energy and pure gasoline that throw off regular money stream. It additionally carries one of many longest dividend‑development observe data within the nation, on the cusp of turning into considered one of Canada’s true dividend aristocrats. To me, this alerts the administration group’s confidence in lengthy‑time period money‑stream sturdiness. With capital nonetheless flowing into grid modernization, transmission, and cleaner era, Canadian Utilities has a visual pipeline of tasks that ought to help low‑ to mid‑single‑digit earnings development off an already cheap base.
For traders, that math is highly effective. Begin with a roughly 4% money yield, layer on even 3% to 4% earnings per share (EPS) development, and also you’re all of a sudden in excessive‑single‑digit complete‑return territory from a reputation that many nonetheless deal with like a bond substitute. If charges drift decrease or just stabilize, there’s room for some a number of growth on prime of that. This gives Canadian Utilities a reputable path to beating a extra development‑dependent, sentiment‑pushed Canadian index within the 12 months forward.