This Canadian utility giant could be the ultimate defensive play

Investors looking to gain exposure to the rise of artificial intelligence have some great growth stocks to choose from. Whether you’re considering investing in the hardware (semiconductors, data centers, etc.) as the backbone of this revolution, the companies building the AI ​​applications, or other related trends, many industries are benefiting from a continued and consistent increase in demand due to this emerging technology.

That said, one of the best ways I think we can capitalize on this trend is through the utilities sector. Within this sector Fortis (TSX:FTS) remains one of my top picks.

This is why I think Fortis still looks like the ultimate defensive play right now, while also offering impressive long-term growth potential.

The demand for energy will increase or remain stable in the long term

Investors who believe that population growth and the emergence of new technologies will require greater energy production in the long term have benefited from owning a company like Fortis. This consistent and stable growth in demand has enabled Fortis to increase its dividend for more than five decades in a row. That’s one of the TSX’s longest stretches, and the company’s dividend is one of the key stabilizers I think long-term investors can rely on as part of the investment thesis behind this excellent company.

The point is, if AI drives the kind of future demand the market is pricing in, perhaps the dividend increases and capital growth of the past provide insight into this company’s potential.

The stock chart above undoubtedly indicates that market participants are moving in this direction. I believe that the stability of Fortis’ underlying business model in providing electricity and natural gas to millions of residential and commercial customers provides the stability and dividend growth that investors desire. Increased demand thanks to AI for the same inputs could meaningfully strengthen the trajectory.

Is Fortis a buy right now?

I think investors looking to go defensive or offensive have reason to consider Fortis here.

The company’s sub-4% dividend yield is still better than Canadian government bonds. And with a strong growth profile going forward and a strong balance sheet, which could lead to additional acquisitions down the road, this is a company that I think can offer a lot of upside in the long term.

For those thinking about adding exposure to a top company stock, Fortis remains one of my top picks in the North American group. Until something drastically changes, I’m going to stick with this name.