When investing for the long term, consider TSX stocks with fundamentally strong businesses and the ability to generate steady growth and regular income. Specifically, this approach helps you achieve above-average total returns, a combination of both capital growth and dividend payments that can grow your wealth over time.
Hydro One (TSX:H) is one such high-quality Canadian stock that offers both growth and income. Furthermore, this utility operates a defensive business, making your portfolio more stable in the long term.
This is why Hydro One is a solid long-term bet
Hydro One is one of Canada’s largest utility stocks, offering investors a balance of growth, income and long-term stability. Because Hydro One focuses primarily on the transmission and distribution of electricity, Hydro One benefits from a regulated business model that protects it from the volatility associated with the power generation and commodity markets. This stable operating framework allows the company to generate consistent profits and reliable cash flow, even as broader market conditions fluctuate.
That financial stability and growth have positioned Hydro One as a reliable dividend payer. Hydro One has rewarded investors with regular dividend increases, supported by its growing interest base and stable profits with low risk. Between 2016 and 2022, the dividend grew at a compound annual growth rate (CAGR) of 5%. Since 2022, this growth has accelerated to approximately 6% per year. While the current dividend yield of 2.6% may seem modest, the reliability and sustainability of these payouts make them truly valuable for long-term investors.
Hydro One is not just about dividends. It’s also about growth. The company’s share price is up more than 19% in 2025 alone, reflecting investor confidence in its stable business model and strong fundamentals. Over the past five years, Hydro One’s share price has more than doubled, with an increase of approximately 104.5% and a CAGR of approximately 15.4%.
In short, the combination of reliable income, steady growth and long-term stability makes it one of the most attractive investments.
Can Hydro One stock ddouble in 5 years?
Hydro One’s rate-regulated operations will enable the company to generate predictable cash flows, supporting its payouts and share price. income. Moreover, growth is anchored in self-financed organic projects, which are likely to expand the interest base and modernize aging infrastructure. The multi-year capital program will help further expand the interest base, allowing the country to generate income with low risk.
Furthermore, Hydro One is well positioned to benefit from increasing electricity demand, driven by a growing population, the clean energy transition and industrial development. The company is also investing in modernizing its transmission and distribution systems, integrating renewable energy sources and implementing advanced technologies, which bode well for future growth. Moreover, the small, unregulated segment also has solid growth potential.
Looking ahead, management expects the interest base to grow 6% annually through 2027, driving earnings to a CAGR of 6-8% over the same period. This will help Hydro One increase its dividend by 6% annually over the medium term. In addition, the focus on productivity savings and supply chain diversification will help protect against cost overruns and tariff uncertainties.
It is striking that the Hydro One share has grown at a CAGR of more than 15% over the past five years. However, given its growing interest base and strong electricity demand, Hydro One’s growth rate could accelerate, boosting its stock price. Even if Hydro One stock grows at a CAGR of 15%, the stock could still reach $104.15 in five years, which is more than double its closing price of $51.78 on October 30.
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