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Dividend Investors: Top Canadian Utility Stocks for November 2023

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Written by Amy Legate-Wolfe at The Motley Fool Canada

Utility stocks may seem like dividend stocks investors would have purchased at the beginning of an economic downturn rather than an upswing. And you’d be right! These are stable stocks that provide solid income streams. This comes from long-term contracts that last years.

However, I would still consider utility stocks some of the best investments in November 2023. As this month draws to a close, along with soon this year, it’s never been a better time to get into utility stocks. They provide investors with not only solid income, but a huge deal. So, let’s look at two strong options on the TSX today.

Canadian Utilities

First off, I would certainly look to Canadian Utilities (TSX:CU) if you’re an investor looking for dividend growth year after year. That’s because CU stock is the original Dividend King among utility stocks. That means the company has increased its dividend each and every year for the last 50 years!

Yet shares climbed during 2021 as the market slipped, only to drop as investors took out their returns. Because of this, shares of CU stock have remained down. It hasn’t helped that foreign currency exchange rates have hurt the stock. Further, that asset value also dropped because of the markets.

But now, the market is changing, and that should spell out a great year for CU stock. So, not only can you look forward to more dividend increases, but more growth in the stock itself. Shares are currently down 17% in the last year, marking huge value — especially for long-term shareholders.

You can now pick up CU stock trading at just 13.94 times earnings, and 2.09 times sales. Further, it offers a 9.99 enterprise value (EV) over earnings before interest, taxes, depreciation, and amortization (EBITDA). Overall, it’s quite a valuable stock — especially when you take into consideration a dividend yield of 5.91%. That’s far higher than the five-year average at 4.89%.

Hydro One stock

Then there’s a newer option. Yet instead of looking at Hydro One (TSX:H) as a newbie on the market, consider this one of the utility stocks to get in at on the ground floor. After all, the same themes remain true. H stock offers long-term contracts, supported by the province of Ontario in fact, and will remain stable no matter the market conditions.

In fact, H stock offers another bonus. That’s because the company already provides power from its hydro facilities. Because of this, you can look forward to growth even if the entire world were to shift over to renewable energy power tomorrow. That cannot be said for these older companies.

And again, not only is H stock powered by the Province of Ontario, but it is in the most populated province in the country. This allows for strong income streams that won’t simply disappear any time soon. So, you can get a great deal while this dividend stock remains in its early years.

For now, you can bring in the utility stock while shares are on par with where they were last year. Shares trade at a reasonably valued 21 times earnings as well, and just 2.93 times sales. Plus, it still offers value trading at just 14.3 EV/EBITDA. Finally, you can grab a dividend yield of 3.14%, which is slightly higher than its five-year average of 3.04%.

The post Dividend Investors: Top Canadian Utility Stocks for November 2023 appeared first on The Motley Fool Canada.

Should You Invest $1,000 In Canadian Utilities?

Before you consider Canadian Utilities, you'll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in November 2023... and Canadian Utilities wasn't on the list.

The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 24 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks * Returns as of 11/14/23

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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.