One Canadian Dividend Stock Built to Hold in Any Market

In an always uncertain market, stability matters. While growth stocks can surge during bull runs, they tend to falter when volatility rises. That’s where dividend-paying blue chips — especially in defensive sectors — shine. For Canadian investors seeking reliability, one name consistently appears at the top of the list: Fortis (TSX:FTS).

The power of defensive dividend stocks

Dividend investing isn’t just about income — it’s about resilience. Companies that can consistently generate cash and return it to shareholders tend to have durable business models. In Canada, utilities, banks, and pipelines dominate this category, but utilities in particular offer a unique advantage: predictable demand.

Electricity and gas are essential services. Regardless of economic conditions, households and businesses continue to consume power. This stability allows regulated utilities to produce steady earnings and maintain dividends even during downturns. As a result, they often exhibit lower volatility compared to the broader market.

For long-term investors, this combination of income plus stability can be powerful. Reinvested dividends compound over time, while the underlying business provides a cushion during market stress.

Fortis: A blueprint for reliability

Fortis is a prime example of what a “buy-and-hold forever” dividend stock looks like. Headquartered in Canada, the company operates regulated electric and gas utilities across North America and the Caribbean, giving it a diversified and stable earnings base. 

What truly sets Fortis apart is its dividend track record. The company has built a reputation for consistent annual dividend increases, supported by predictable cash flows from regulated assets. Currently, Fortis pays $2.56 per share annually, yielding around 3.2%, with quarterly payouts. 

Equally important is sustainability. Fortis maintains a sustainable payout ratio — about 72% of adjusted earnings — which leaves room for reinvestment and future dividend growth. This balance between rewarding shareholders and funding expansion is critical for long-term success.

The company also continues to grow. It has a five-year capital plan of $28.8 billion through 2030 to drive infrastructure investments and rate-base expansion at a compound annual growth rate of about 7%. These investments are 77% in stable transmission and distribution assets, providing visibility for future returns.

Why Fortis holds up in any market

What makes Fortis particularly compelling is its performance across economic cycles. In bull markets, it may not deliver explosive gains — but that’s not the point. Its strength lies in consistency.

During downturns, investors often rotate into defensive sectors, supporting share prices for resilient stocks like Fortis. Meanwhile, it continues to pay out dividends, offering both income and psychological reassurance for investors. This “sleep-well-at-night” quality is invaluable when markets turn volatile.

Additionally, utilities like Fortis benefit from long-term structural trends. Electrification, grid modernization, and renewable energy integration all require significant infrastructure investment — areas in which Fortis is already active in. These trends provide a steady runway for growth without relying on risky innovation or consumer preferences.

For Canadian investors, there’s also a tax advantage. Eligible dividends from companies like Fortis receive favourable tax treatment in non-registered accounts, enhancing after-tax returns.

Investor takeaway

A truly great dividend stock isn’t flashy — it’s dependable. Fortis is a great example of this philosophy with its regulated business model, consistent dividend growth of over 50 consecutive years, and steady financial performance. While it may not outperform in every market, it delivers something arguably more valuable: reliability. For investors building a long-term portfolio designed to weather any environment, Fortis remains a cornerstone worth holding and to be bought on meaningful dips.

The post One Canadian Dividend Stock Built to Hold in Any Market appeared first on The Motley Fool Canada.

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More reading

• 2 Canadian Stocks That Look Ready to Break Out This Year
• 3 Canadian Dividend Stocks Perfect for Retirees
• 5 TSX Dividend Stocks Worth HoldingThrough the Next 10 Years
• 2 Canadian Dividend Stocks That Make Sense to Hold When Markets Get Bumpy
• Looking for a 5.4% Average Yield? These 3 TSX Stocks Are Worth a Look

Fool contributor Kay Ng has no position in any of the stocks mentioned. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.