When headlines begin warning a few doable U.S. recession, it’s regular for Canadian buyers to really feel nervous. The economies of Canada and the U.S. are deeply related, so a downturn south of the border usually sends ripples throughout the TSX. In occasions like these, one of the best factor to do isn’t to panic. It’s time to search for steady, recession-resistant shares. One title that stands out is Hydro One (TSX:H).
Hydro One
Hydro One is a utility firm that does one factor very nicely: it retains the ability on throughout Ontario. It operates Ontario’s largest electrical energy transmission and distribution system, delivering energy to almost 1.5 million clients. Utilities like Hydro One have a tendency to carry up nicely throughout financial slowdowns. Individuals want electrical energy it doesn’t matter what’s taking place with the financial system, and that regular demand helps the corporate generate constant income and earnings.
The market definitely appears to agree. Hydro One at present has a market cap of about $29.2 billion. Its enterprise is protected by regulation, which means it earns predictable returns on its investments. This can be a large motive why utilities are thought-about secure havens when the financial system appears to be like shaky. Whereas different corporations would possibly see earnings dip or turn into risky, Hydro One can depend on a gentle revenue stream backed by long-term contracts and controlled charges.
In its most up-to-date earnings report, Hydro One posted stable outcomes. For the primary quarter of 2025, it generated income of $2.41 billion and web revenue of $358 million. That’s a giant enchancment from $200 million the quarter earlier than. Earnings per share (EPS) got here in at $0.60, forward of analyst expectations, which had been nearer to $0.54. Beating earnings throughout unsure occasions offers buyers confidence, and Hydro One has now delivered that type of consequence persistently.
Trying forward
One of many largest causes to think about Hydro One proper now’s the dividend. The dividend inventory lately raised its dividend to $1.33 per 12 months. Based mostly on its latest share worth of round $48.75, that’s a yield just below 2.8%. Whereas it’s not the best dividend on the TSX, what makes it interesting is the reliability. Hydro One has elevated its dividend every year because it went public in 2015.
One more reason Hydro One is enticing is that it’s not flashy. That will sound boring, however in a risky market, boring is usually a good factor. This can be a dividend inventory that doesn’t swing wildly. Its low beta of round 0.16 means it strikes lower than the broader market. That’s precisely what buyers need when frightened a few U.S. recession. You don’t need drama. You need calm, and Hydro One delivers simply that.
There are at all times dangers to think about. As a regulated utility, Hydro One relies upon closely on selections made by the Ontario Power Board. If laws change or the province freezes price will increase, it may put strain on earnings. However even with that in thoughts, Hydro One has managed to navigate coverage adjustments nicely over the previous decade. It continues to spend money on grid modernization and infrastructure upgrades, setting itself up for long-term success.
Backside line
If a U.S. recession does hit, it may influence exports, commerce, and enterprise confidence in Canada. However demand for electrical energy isn’t going anyplace. And dividend shares like Hydro One are constructed to thrive in that type of setting. With stable earnings, a reliable dividend, and a low-volatility profile, it is a TSX inventory price contemplating proper now should you’re searching for security in stormy climate.
