Statistics Canada released its October 2017 GDP numbers on December 22. Real GDP growth was flat in October, down from the 0.2% growth experienced in September. Utilities contracted 1.3% in comparison to the higher activity seen in September due to volatile weather conditions.
The Bank of Canada is expected to move on at least two rate hikes in 2018. Utility stocks have been a fantastic income play during this prolonged period of low interest rates. However, continued tightening will undoubtedly make room for other investments that provide comparable income and a far greater potential for capital growth.
Still, central banks remain committed to gradual tightening. The benchmark interest rate is still historically low, which should discourage investors from moving into bonds or other rate sensitive vehicles that have been hampered in this environment.
Hydro One Ltd. (TSX:H) stock was up 0.54% in early afternoon trading on December 28. The stock has fallen 4.9% in 2017. However, Hydro One leadership has vowed that it will seek out a more aggressive strategy after its acquisition of U.S. utility Avista Corp. Hydro One last offered a quarterly dividend of $0.22 per share representing a 3.9% dividend yield.
Fortis Inc. (TSX:FTS)(NYSE:FTS) is another solid play for those unwilling to quit on utilities as a source of income heading into 2018. Shares of Fortis have increased 11% in 2017. The stock boasts a quarterly dividend of $0.43 per share with a 3.7% dividend yield.