Utilities have lengthy carried an unfair popularity within the inventory market. They’re usually dismissed as sluggish, boring, and missing upside — hardly the centre of thrilling funding tales.
However that notion misses the purpose. Utilities are constructed on predictability, regulated money flows, and important providers, which makes them among the most dependable companies buyers can personal. That reliability, over time, quietly turns into one thing extra interesting: significant profitability.
For conservative buyers, revenue seekers, and anybody seeking to stabilize a diversified portfolio, utilities deserve a better look. What they lack in flash, they usually make up for in regular compounding and rising revenue over time.
A easy technique to put money into the sector
One easy technique to achieve publicity to Canadian utilities is thru an exchange-traded fund (ETF) like iShares S&P/TSX Capped Utilities Index ETF (TSX:XUT). Over the previous decade, XUT delivered a compound annual progress fee of roughly 9%, turning a $10,000 funding into about $23,610. That will not rival high-growth shares, however it’s a powerful end result for a historically defensive sector.
The ETF at the moment holds 14 Canadian utility firms, with returns closely influenced by its prime 5 holdings, which collectively account for about 69% of the fund.
These embody the next:
- Fortis: About 23% of the fund
- Brookfield Infrastructure Companions (TSX:BIP.UN): 14%
- Emera: 13%,
- Hydro One: 11%
- AltaGas: 8%
Every brings a mix of defensiveness and resilience from regulated property, long-term contracts, and inflation-linked money flows — substances that help reliable returns throughout market cycles.
Brookfield Infrastructure Companions: A primary instance
Amongst these prime holdings, Brookfield Infrastructure Companions seems to be notably compelling. Analysts at the moment see it buying and selling at an estimated 13% low cost to intrinsic worth, making it essentially the most attractively valued identify within the group.
BIP has delivered a powerful compound annual progress fee of about 14% over the previous decade, rising a $10,000 funding into roughly $38,220.
Just lately, the corporate reported stable fourth-quarter and full-year 2025 outcomes and elevated its money distribution by 5.8%, marking its seventeenth consecutive yr of distribution progress. That progress stays properly coated, with a 2025 payout ratio of 66% of funds from operations (FFO), per its long-term common of 70% from 2016 to 2025.
The corporate’s energy lies in its diversified world portfolio of utilities, transport, midstream, and knowledge infrastructure property. Embedded inflation escalators, GDP-linked quantity progress, and reinvestment of money flows are anticipated to drive natural FFO progress of 6–9% yearly.
From “boring” to highly effective compounding
Brookfield Infrastructure Companions additionally actively recycles capital — promoting mature property and redeploying funds into higher-return alternatives.
In 2025, it achieved its US$3 billion capital recycling goal and goals to repeat that determine this yr. In the meantime, it ended the yr with a file capital backlog of practically US$9.2 billion, with knowledge infrastructure accounting for US$7.1 billion of the backlog, representing a major progress driver because the mega pattern of digitalization and AI investments accelerates.
For long-term buyers, this creates a robust setup. Those that purchased Brookfield Infrastructure Companions a decade in the past began with a yield of round 5.5% and would now take pleasure in a yield on price exceeding 10%.
Traders solely must deal with when to purchase the inventory. (Overlook about promoting.) Right now, with items buying and selling under $50 and yielding about 5%, affected person buyers can nonetheless place themselves for stable long-term returns and rising revenue that outpaces inflation — particularly by including on market dips.
Investor takeaway
Utilities could by no means be thrilling within the conventional sense, however that’s precisely their benefit. Via steady money flows, disciplined capital allocation, and regular dividend progress, the sector — led by names like Brookfield Infrastructure Companions — reveals how “boring” investments can quietly change into very worthwhile over time.
