What to Know About Canadian Utility Stocks in 2026

When it comes to finding safe and reliable investments that you can have confidence holding through thick and thin, Canadian utility stocks are the best of the best.

While diversification is always important, on an individual basis, high-quality utility stocks are some of the most defensive and dependable investments on the TSX.

These are not stocks you buy for explosive growth. Instead, utilities are about steady, consistent performance, which is exactly what makes them so reliable.

That consistency becomes even more important with uncertainty persisting so far in 2026. With questions still surrounding interest rates, economic growth, and inflation, many investors are looking for stability.

The reason utility stocks are so dependable is their defensive nature. They sit at the centre of the economy, providing essential services like electricity, natural gas, and water. Regardless of whether the economy is booming or slowing down, demand for these services remains steady.

So, with plenty of macroeconomic uncertainty still on the table, here’s what investors should know about Canadian utility stocks heading into 2026.

Canadian utility stocks are some of the best to buy for reliability and predictability

The biggest reason investors own Canadian utilities is stability. Most utility companies operate in highly regulated environments, which allows them to earn a predictable return on invested capital while keeping prices fair for consumers.

That regulation limits their upside, but it also significantly reduces risk. As a result, utilities tend to deliver far more predictable earnings and cash flow than almost any other business.

That consistency is what allows many utility companies to pay reliable dividends and, in many cases, increase those dividends year after year. That’s why they’re some of the best stocks to buy and hold in your portfolio for years.

Why Canadian utility stocks are ideal in uncertain environments

Not only can Canadian utility stocks help to lower the risk of your portfolio, but they can also benefit from the uncertain environment we are in.

For example, if interest rates don’t decline much further, the broader stock market rally could start to cool off, making dividend income more attractive to investors.

On the other hand, if rates do move lower, utility stocks can benefit quickly. Borrowing costs ease and yields continue to decline, which could help utility stocks to continue rallying.

Either way, high-quality Canadian utilities stocks continue to be some of the most reliable stocks you can buy for 2026 and beyond.

Two ways to invest in utility stocks

There are two main ways investors can gain exposure to the utility sector.

The first is by buying pure-play utility companies, where the entire business is focused on regulated utilities.

One of the best examples is Fortis (TSX:FTS). Fortis owns regulated electric and gas utilities across Canada, the U.S., and the Caribbean. The company generates highly predictable cash flow and has increased its dividend every year for half a century.

Another strong option is Emera (TSX:EMA). Emera is similar in many ways to Fortis, with a focus on heavily regulated utilities in North America and the Caribbean. Compared to Fortis, Emera offers slightly less growth potential over the near term, with a slightly higher dividend yield today.

The second approach is by owning Canadian stocks in which utilities make up a significant portion of the business, but not the entire operation.

Brookfield Infrastructure Partners (TSX:BIP.UN) is one of the best examples. Although it’s not a pure utility, a large portion of its portfolio consists of regulated utilities and essential infrastructure assets. This gives investors exposure to reliable cash flow with more upside potential from global infrastructure growth.

Another option is AltaGas (TSX:ALA), which operates regulated utilities alongside midstream energy assets. This mix provides steady income while offering more growth potential than a traditional utility.

These types of stocks can be a better fit for investors who don’t need maximum safety and are willing to accept slightly more volatility in exchange for higher long-term growth potential.

So, if you’re worried about uncertainty persisting throughout 2026 or just want to shore up your portfolio, high-quality Canadian utility stocks are some of the best you can buy.

The post What to Know About Canadian Utility Stocks in 2026 appeared first on The Motley Fool Canada.

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Fool contributor Daniel Da Costa has positions in Brookfield Infrastructure Partners. The Motley Fool recommends Brookfield Infrastructure Partners, Emera, and Fortis. The Motley Fool has a disclosure policy.