High interest rates hurt utility companies but as the Bank of Canada's rate-cutting cycle continues, three Canadian utility stocks are back on investors' radars. Besides stable returns, Brookfield Renewable Partners (TSX:BEP.UN), Emera (TSX:EMA), and Hydro One (TSX:H) will provide steady passive income streams.
Growth enabler
Brookfield Renewable Partners has advanced 43.6% in the last six months. At $38.56 per share, the year-to-date gain is 15.6%. Notably, a prospective dividend investor will feast on the 4.9% yield.
The $25.2 billion company owns and operates renewable power generating facilities in North America, Brazil, and Colombia, and Brazil. Brookfield's portfolio includes hydroelectric, wind, and solar. It is also into renewable natural gas, carbon capture and storage, recycling, cogeneration biomass, nuclear services, and power transformation.
Its CEO, Connor Teskey, said, "Renewables are not simply a decarbonization solution, they are a growth enabler. Our investments focused on adding leading platforms in attractive markets with scale operating businesses and development pipelines that complement our current operations and further diversify our cash flows."
In Q2 2024, revenue increased 23% year-over-year to $1.5 billion, although the net loss reached $88 million compared to Q2 2023. Nonetheless, Tesky assures that the successful deployment of capital into opportunities should enhance Brookfield's market-leading reach and scale of the business.
Dividend aristocrat
Emera is not a hard sell owing to its dividend aristocrat status. The $15.6 billion regulated electric company has raised dividends for 18 consecutive years. After the most recent dividend hike, its President and CEO, Scott Balfour, said, "Today's dividend increase is evidence of our dedication to our shareholders and to the financial resilience of Emera."
Balfour adds, "The continued growth in our dividend rate is fueled by our confidence in achieving a targeted 5% to 7% average annual adjusted EPS growth through 2027. It reflects our strategic focus on sustainable financial performance and long-term stability." Suppose you invest today. Emera trades at $53.49 per share and pays a hefty 5.5% dividend.
In the first half of 2024, net income declined 42.9% year-over-year to $336 million due to increased interest expense. Emera has a three-year, $8.8 billion capital investment plan in place. Balfour expects the capital deployment to deliver strong results.
Large scale, low-risk
Hydro One has been steady for most of the year. The market-beating year-to-date return is 18.5%. At $46.02 per share, the dividend offer is a modest but safe 2.8% dividend. This $27.7 billion regulated electric utility firm is Ontario's largest electricity transmission and distribution service provider. Its operations are large scale and the stock is low risk, if not defensive.
In Q2 2024, revenue and net income increased 9.1% and 10.2% respectively to $2 billion and $292 million compared to Q2 2023. According to management, the revenue increase was due to the Ontario Energy Board-approved 2024 rates and higher average monthly peak demand.
Its President and CEO, David Lebeter, said, "It's an exciting time in the industry." Hydro One's ongoing concern is the aging power system infrastructure. It will continue to invest in Ontario's electricity transmission and distribution systems to address the concern.
Solid investments
Brookfield Renewable Partners, Emera, or Hydro One are excellent for risk-averse investors. You get stable returns on top of uninterrupted income streams.
