Canadian Regulated Utilities: A High-Conviction Buy for Durable Income and Growth in a Volatile Market

In an era of market volatility driven by inflationary pressures, geopolitical uncertainty, and shifting energy dynamics, Canadian regulated utilities stand out as a rare combination of defensive resilience and long-term growth potential. Among the sector's most compelling names are AltaGas (TSX: ALA), Brookfield Infrastructure Partners (TSX: BIP), and Emera (TSX: EMA), all of which have been highlighted by RBC Capital Markets as "Outperform" picks. These companies are not only insulated from macroeconomic shocks by their regulated revenue models but are also strategically positioned to benefit from secular trends such as grid modernization, renewable energy integration, and government-led infrastructure spending.

AltaGas: Durable Earnings and Strategic Growth in Energy Infrastructure

AltaGas's third-quarter 2025 results underscore its resilience. Despite a 9% year-over-year decline in normalized EBITDA due to the absence of a pension settlement from 2024, the company maintained a disciplined capital program and reaffirmed its 2025 guidance. Its Midstream segment saw a 13% EBITDA increase, driven by stronger global export volumes and improved performance at the Dimsdale natural gas storage asset according to the company's announcement. Meanwhile, the Utilities segment, though down from a one-time pension settlement, remains a cornerstone of stable cash flows.

RBC Capital Markets analyst Maurice Choy has maintained an "Outperform" rating for AltaGas, citing its alignment with rising North American energy demand and grid resilience initiatives. The company's 2025 capital allocation-51% to Utilities and 45% to Midstream-reflects a balanced approach to growth and operational efficiency. Notably, AltaGas raised its dividend by 6% in 2025, extending its five-year compound annual growth rate (CAGR) of 5-7%. This dividend discipline, combined with new projects like the Keweenaw Connector Pipeline and Dimsdale expansion, positions AltaGas to deliver durable income and capital appreciation.

Brookfield Infrastructure: Scaling Green Energy and Global Resilience

Brookfield Infrastructure has emerged as a leader in the energy transition, leveraging its global footprint to secure high-conviction projects. The firm's recent $12 billion agreement with Andhra Pradesh, India, to develop a 3 GW clean energy-powered data center and other renewable initiatives exemplifies its strategic focus. This investment aligns with global trends toward decarbonization and digital infrastructure, areas where Brookfield's expertise in long-term asset management provides a competitive edge.

The company's capital plan for 2026–2030 emphasizes grid resilience, particularly in North America, where aging infrastructure and climate risks are driving demand for upgrades. Brookfield's ability to blend traditional infrastructure (e.g., toll roads, utilities) with renewable energy projects creates a diversified revenue stream. While some private equity investments have raised lender concerns, the core infrastructure business remains robust, supported by long-term contracts and inflation-linked returns.

Emera: Grid Modernization and Rate Base Expansion

Emera's Q3 2025 results highlight its role as a bellwether for regulated utilities. The company reported a 9% increase in adjusted earnings per share, driven by strong performance at Tampa Electric and its $20 billion capital plan for 2026–2030. This plan, with 80% allocated to Florida, targets grid modernization and reliability, aiming for 7-8% annual rate base growth through 2030. Such investments are critical as extreme weather events and aging infrastructure create urgent demand for upgrades.

Analyst ratings for Emera have been overwhelmingly positive. RBC reiterated a "Buy" rating with a C$76 price target, while J.P. Morgan and OpenAI's Wattson Jouly also expressed confidence in the stock. Emera's dividend growth, supported by its regulated utility model, has historically outpaced inflation, making it a top pick for income-focused investors.

Sector Resilience and Long-Term Total Return Potential

The Canadian regulated utilities sector benefits from structural tailwinds. Government-led infrastructure spending directly supports grid resilience and renewable energy projects. These initiatives align with the strategic priorities of AltaGas, Brookfield, and Emera, ensuring long-term cash flow visibility. Additionally, the sector's low beta (typically below 0.8) offers downside protection during market selloffs, making it an attractive hedge against volatility.

For investors seeking a balance of income and growth, these utilities present a compelling case. AltaGas's energy infrastructure plays, Brookfield's global green energy bets, and Emera's grid modernization efforts are all underpinned by durable earnings, disciplined capital allocation, and alignment with secular trends. As RBC Capital Markets notes, the sector's "low-risk growth" profile is increasingly rare in today's market.

Conclusion

In a world where macroeconomic risks loom large, Canadian regulated utilities offer a rare combination of stability and growth. AltaGas, Brookfield Infrastructure, and Emera are not just surviving in this environment-they are thriving by adapting to the energy transition and leveraging government support. For investors with a long-term horizon, these names represent a high-conviction opportunity to build a resilient portfolio anchored by durable income and capital appreciation.