Canadian utility stocks have been dependable options for investors since we entered this decade. Indeed, these companies were a great target during the COVID-19 pandemic as they offer essential services. The S&P/TSX Capped Utilities Index dropped 1.35% on Friday, June 23. Today, I want to zero-in on two utility stocks that look undervalued in late June.
Canadian Utilities (TSX:CU) is a Calgary-based company that is engaged in the electricity, natural gas, and retail energy businesses in the United States, Australia, and around the world. Shares of this utility stock have dropped 5.4% month-over-month as of close on June 23. The stock is down 7% so far in 2023.
In the first quarter of fiscal 2023, this company saw adjusted earnings dip marginally to $217 million. Meanwhile, Canadian Utilities has invested $304 million in capital expenditures as it aims to expand its rate base in the years ahead. This, in turn, will support dividend-growth through the middle of this decade. The stock is a dividend king, having posted 50 straight years of dividend growth. It offers a quarterly dividend of $0.449 per share. That represents a strong 5.2% yield.
Hydro One (TSX:H) is the largest utility in the province of Ontario. Its shares have increased marginally in the year-to-date period. In Q1 2023, Hydro One reported total revenues of $2.07 billion – up from $2.04 billion in the prior year. Operating, maintenance, and administrative costs weighed on earnings, but I’m still bullish on this utility stock for the long haul.
This stock has posted a dividend increase in every year since its inception on the TSX. It currently offers a quarterly dividend of $0.296 per share, which represents a 3.1% yield.
