But that perception misses the point. Utilities are built on predictability, regulated cash flows and essential services, making them some of the most reliable companies investors can own. Over time, that reliability quietly transforms into something more attractive: meaningful profitability.
For conservative investors, income seekers and anyone looking to stabilize a diversified portfolio, utilities deserve a closer look. What they miss in a short period of time, they often make up for with steady compounding and growing income over time.
A simple way to invest in the sector
A simple way to gain exposure to Canadian utilities is through an exchange-traded fund (ETF). iShares S&P/TSX Capped Utilities Index ETF (TSX:XUT). Over the past ten years, XUT has achieved a compound annual growth rate of approximately 9%, turning a $10,000 investment into approximately $23,610. That may not compare to high-growth stocks, but it’s a strong result for a traditionally defensive sector.
The ETF currently owns 14 Canadian utilities, with returns heavily influenced by the top five investments, which together represent approximately 69% of the fund.
These include the following:
- Fortis: About 23% of the fund
- Brookfield Infrastructure Partners (TSX:BIP.UN): 14%
- Accept: 13%,
- Hydro One: 11%
- AltaGas: 8%
Both bring a mix of defensiveness and resilience from regulated assets, long-term contracts and inflation-linked cash flows – ingredients that support reliable returns across market cycles.
Brookfield Infrastructure Partners: a good example
Among these top holdings, Brookfield Infrastructure Partners appears particularly attractive. Analysts currently see it at an estimated 13% discount to intrinsic value, making it the most attractively valued name in the group.
BIP has achieved an impressive compound annual growth rate of approximately 14% over the past decade, growing a $10,000 investment to approximately $38,220.
Recently, the company reported solid results for the fourth quarter and full year 2025 and increased its cash distribution by 5.8%, marking its 17th consecutive year of distribution growth. That growth remains well covered, with a 2025 payout ratio of 66% of funds from operations (FFO), in line with the long-term average of 70% between 2016 and 2025.
The company’s strength lies in its diversified global portfolio of utilities, transportation, midstream and data infrastructure. Built-in inflation escalators, GDP-linked volume growth and cash flow reinvestment are expected to drive organic FFO growth of 6 to 9% per year.
From “boring” to powerful composition
Brookfield Infrastructure Partners also actively recycles capital by selling mature assets and reinvesting funds in higher-return opportunities.
In 2025, it reached its capital recycling target of $3 billion and aims to repeat that figure this year. Meanwhile, it ended the year with a record capital backlog of nearly $9.2 billion, with data infrastructure accounting for $7.1 billion of the backlog, representing a key growth driver as the megatrend of digitalization and AI investment accelerates.
For long-term investors, this creates a powerful setup. Those who bought Brookfield Infrastructure Partners a decade ago started with a yield of around 5.5% and would now enjoy a return on costs of more than 10%.
Investors only need to focus on when to buy the stock. (Forget selling.) With shares trading below $50 and yielding about 5%, patient investors can still position themselves for solid long-term returns and growing income that beats inflation—especially adding in market declines.
Takeaway for investors
Utilities may never be exciting in the traditional sense of the word, but that’s precisely their advantage. Through stable cash flows, disciplined capital allocation and steady dividend growth, the industry – led by names like Brookfield Infrastructure Partners – is showing how ‘boring’ investments can quietly become highly profitable over time.
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