Hydro One
Hydro One (TSX:H) is a pure-play electric transmission and distribution company serving approximately 1.5 million customers. Because 99% of its operations are fully regulated and there is minimal exposure to commodity price fluctuations, the company’s financial performance remains largely insulated from economic cycles and market volatility. Backed by stable and predictable profits, the utility’s shares have delivered a total return of 48.7% over the past five years. Over the same period, it has increased its dividend by 5.4% annually and currently offers a forward yield of 2.6%.
Furthermore, electricity demand is increasing due to the electrification of the transportation sector and the rapid expansion of energy-intensive data centers, driven by the increasing adoption of artificial intelligence. Amid rising electricity demand, Hydro One plans to expand its asset base through an $11.8 billion capital investment program, which could increase total assets to $32.1 billion by 2027. Backed by these investments, the company expects adjusted earnings per share (earnings per share) to grow 6% to 8% annually through 2027. Given its stable business model and predictable growth prospects, Hydro One appears to be an attractive defensive investment.
Waste connections
My second choice is Waste connections (TSX:WCN), which provides solid waste management services in the United States and Canada. By focusing primarily on secondary and exclusive markets, the company faces less competition, allowing it to maintain strong pricing power and enjoy higher profit margins. Furthermore, it has expanded its footprint through organic growth and strategic acquisitions, improving its financial performance and stock price. Over the past decade, WCN shares have returned over 500%, at an annual rate of 19.6%.
Additionally, WCN continues to expand its presence through continued acquisitions. It has a solid acquisition pipeline of private companies that could generate about $5 billion in revenue. In addition to these expansions, the company is focused on implementing technological developments, improving safety performance and increasing employee engagement, which will support margin expansions in the coming years. The waste management company has increased its dividend by double digits for fourteen years in a row and currently offers a yield of 0.84%.
Enbridge
Enbridge (TSX:ENB) is another reliable Canadian stock that I’m bullish on given its highly contracted midstream business and low-risk utilities. The company also owns and operates 41 renewable energy resources with a total generating capacity of 7.2 gigawatts, and sells the power generated from these facilities through long-term power purchase agreements. In addition, the company has minimal exposure to fluctuations in commodity prices, with 80% of adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) indexed to inflation. This structure helps ensure that financial performance remains resilient to fluctuations in commodity prices and economic cycles, delivering stable and predictable financial results and cash flows.
Backed by its strong financial performance, Enbridge has delivered a total return of over 615%, representing an annualized growth rate of 10.3%. The company has also consistently paid dividends over the past 70 years and has increased its payout by an impressive 9% annually since 1995. Additionally, the company is expanding its asset base through $9-$10 billion in annual capital investments to take advantage of growth opportunities in its business segments. Amid these expansions, the company’s management predicts that adjusted EBITDA and earnings per share will grow at mid-single digits in the coming years. Given its consistent dividend growth, solid financials and healthy growth prospects, I believe Enbridge will continue to deliver healthy returns in the coming years.
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