Why This Boring Utilities Stock is Starting to Look Very Profitable

Boring stocks can become very interesting when the world suddenly needs what they sell. That’s the case with Superior Plus (TSX:SPB). At first glance, this looks like a plain energy-distribution company. It sells propane, compressed natural gas, renewable natural gas, hydrogen, and related services across North America. It serves homes, farms, businesses, utilities, industrial customers, mines, and other sites that need reliable energy where pipelines may not reach.

Not exactly the kind of stock that screams artificial intelligence (AI). Yet Superior is starting to look far more profitable because of one fast-growing opportunity: data centres.

A real connection

The biggest number is hard to ignore. Superior’s Certarus business recently secured a hyperscale data-centre contract expected to generate more than US$300 million in revenue over its life. The project is designed to support about 135 megawatts (MW) of prime power generation once online.

That’s the real story here. Data centres need enormous amounts of reliable power. But the power grid and pipeline system can’t always move fast enough to match demand. New AI facilities can face long wait times for electrical connections, natural gas pipelines, substations, and transmission upgrades.

Certarus helps solve part of that problem. It provides mobile compressed natural gas solutions. The company can deliver natural gas by truck using high-capacity trailers, portable compression, storage, and pressure-reduction systems. That lets large customers get energy where they need it before permanent infrastructure catches up.

For hyperscale data centres, speed counts. These facilities are expensive, power-hungry, and tied to customers who want capacity quickly. If Certarus can help shorten timelines, Superior moves from a basic fuel distributor to a key support company in the AI infrastructure boom.

Numbers don’t lie

The opportunity is already changing the outlook. Superior said it signed more than US$350 million in contracts over the past nine months, the largest period of contract commitments in Certarus’ history. Management also increased its expected 2027 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) growth rate to about 5% because of the new data-centre agreements.

The base business still provides stability. Superior’s propane operations serve customers who need heating, fuel, and industrial energy. That may not deliver exciting growth every quarter, but it can generate recurring demand. In the first quarter of 2026, North American propane adjusted EBITDA was US$214.6 million, with Canadian propane posting growth from last year.

The dividend adds another reason to watch. Superior declared a quarterly dividend of $0.045 per share, or $0.18 annually. The yield isn’t huge at 2.2% after the company reset the payout, but the lower dividend gives Superior more room to invest in growth and manage debt.

Looking ahead

That tradeoff makes sense. The company plans to invest more capital into CNG in 2026, raising expected capital spending from about US$160 million to US$230 million. For income investors, that may sound less exciting than a fat dividend. But if the money supports profitable data-centre contracts, it could create a stronger business over time.

There’s also a transformation plan underway. Superior’s efficiency program is expected to contribute US$50 million to adjusted EBITDA in 2026 and at least US$75 million by 2028. That gives investors another path to profit growth beyond just new contracts.

The risks are still important, however. Superior has debt, and its leverage ratio was 3.9 times at the end of the first quarter. The company wants to move that lower over time, but extra CNG spending could slow progress. Propane volumes can also move with weather. A warm winter can hurt demand and data centre contracts must still ramp up as expected.

Bottom line

That said, the setup looks much better than it did a few years ago. Superior has a stable core business, a leaner dividend, a cost-savings plan, and a growing role in data-centre power supply. For investors looking beyond obvious AI stocks, SPB could be a practical way to play the physical buildout. And there are few and far between that offer dividends in the data centre space, where even a $7,000 investment in Superior can bring in some extra cash.

COMPANY	RECENT PRICE	NUMBER OF SHARES	ANNUAL DIVIDEND	ANNUAL TOTAL PAYOUT	FREQUENCY	TOTAL INVESTMENT
SPB	$8.15	858	$0.18	$154.44	Quarterly	$6,992.70

Superior Plus may be boring, and that’s alright, because it’s exactly why it could be profitable.

The post Why This Boring Utilities Stock is Starting to Look Very Profitable appeared first on The Motley Fool Canada.

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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Superior Plus. The Motley Fool has a disclosure policy.