When headlines begin warning a few doable U.S. recession, it’s regular for Canadian traders to really feel nervous. The economies of Canada and the U.S. are deeply related, so a downturn south of the border typically sends ripples throughout the TSX. In instances like these, the most effective 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 properly: it retains the facility on throughout Ontario. It operates Ontario’s largest electrical energy transmission and distribution system, delivering energy to just about 1.5 million clients. Utilities like Hydro One have a tendency to carry up properly throughout financial slowdowns. Individuals want electrical energy it doesn’t matter what’s taking place with the economic system, and that regular demand helps the corporate generate constant income and earnings.
The market actually appears to agree. Hydro One at present has a market cap of about $29.2 billion. Its enterprise is protected by regulation, that means it earns predictable returns on its investments. This can be a huge purpose why utilities are thought-about secure havens when the economic system appears shaky. Whereas different firms may see earnings dip or change into risky, Hydro One can depend on a gradual earnings stream backed by long-term contracts and controlled charges.
In its most up-to-date earnings report, Hydro One posted strong outcomes. For the primary quarter of 2025, it generated income of $2.41 billion and internet earnings 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 instances offers traders confidence, and Hydro One has now delivered that form of end result constantly.
Wanting forward
One of many largest causes to think about Hydro One proper now could be the dividend. The dividend inventory not too long ago raised its dividend to $1.33 per yr. Based mostly on its current share worth of round $48.75, that’s a yield slightly below 2.8%. Whereas it’s not the very best dividend on the TSX, what makes it interesting is the reliability. Hydro One has elevated its dividend annually because it went public in 2015.
Another excuse Hydro One is engaging is that it’s not flashy. Which will sound boring, however in a risky market, boring generally is 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 traders need when frightened a few U.S. recession. You don’t need drama. You need calm, and Hydro One delivers simply that.
There are all the time dangers to think about. As a regulated utility, Hydro One relies upon closely on choices made by the Ontario Power Board. If laws change or the province freezes charge will increase, it may put strain on earnings. However even with that in thoughts, Hydro One has managed to navigate coverage adjustments properly 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 affect exports, commerce, and enterprise confidence in Canada. However demand for electrical energy isn’t going wherever. And dividend shares like Hydro One are constructed to thrive in that form of surroundings. With strong earnings, a reliable dividend, and a low-volatility profile, this can be a TSX inventory value contemplating proper now should you’re searching for security in stormy climate.
