Utilities Stocks Are a Good Target in the Spring

The odds of a rate hike in 2019 dropped even further after a yield curve inversion on Canada’s 10-year bond. This inverted further in the middle of this week, illustrating the dangers of a potential recession in the coming months. In fact, oddsmakers are rapidly increasing the chances of a rate cut in one of the coming meetings.

The abandonment of rate tightening is good news for utility stocks, which were hit with headwinds as bond yields rose in 2017 and early 2018. These reliable dividend stocks are still one of the best options for income investors who want to outrun inflation while remaining conservative.

Fortis (TSX:FTS)(NYSE:FTS) is a St. John’s-based utility holding company. The stock is an elite option for investors seeking income. Fortis has achieved dividend-growth for 45 consecutive years, topping its peers on the S&P/TSX Composite Index. It last paid out a quarterly dividend of $0.45 per share which represents a solid 3.5% yield.

Emera (TSX:EMA) is not slouch itself. Shares of the Halifax-based utility have climbed 15.7% in 2019 as of close on March 27. The stock is up 24% year over year.

Emera last paid out a quarterly dividend of $0.5875 per share, which represents an attractive 4.5% yield. The company has achieved dividend growth for 12 consecutive years, which puts it in very good company on the TSX.

Both of these stocks are pricey after a strong start to 2019, but a prolonged low rate environment makes them strong holds into the next decade.