We continue to recommend that you cut your investment risk by spreading your money out across the five main economic sectors (Manufacturing & Industry; Resources; Consumer; Finance; and Utilities). Most investors should have investments in most, if not all, of these five sectors. The proper proportions depend on your circumstances and temperament.

If you’re an income-seeking or conservative investor, you may want to place more emphasis on Utilities. That’s because these firms’ operations (such as power plants and pipelines) generate steady cash flows. That cuts their risk, and gives them plenty of flexibility to invest in new-growth projects. It’s also why utilities are among the best Canadian dividend stocks.

In a just-published issue of Canadian Wealth Advisor, our newsletter for conservative investing, we update our buy/sell/hold advice on a utility that’s investing heavily in new-growth projects: TransCanada Corp. (symbol TRP on Toronto). We’ve covered TransCanada for many years in Canadian Wealth Advisor and our flagship publication, The Successful Investor.

TransCanada: A utility that’s building from a strong base

TransCanada is a good example of a utility that’s fuelling growth through new projects. As well, the Canadian dividend stock’s yield is attractive, at 4.2%.

The company operates a 60,000-kilometre pipeline network that pumps natural gas from Alberta to eastern Canada and the U.S. TransCanada also owns, or has interests in, over 10,900 megawatts of power generation. That includes Bruce Power LP, a nuclear facility in Ontario, and the Ravenswood facility, which serves New York City.

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The company has now spent $12.3 billion of the $22 billion it has earmarked for new growth projects. It will spend the remaining $9.7 billion over the next three and a half years. TransCanada has invested some of these funds in the Keystone pipeline, which is now pumping crude oil from Alberta to refineries in Illinois.

New pipeline will greatly expand this Canadian dividend stock’s reach

The second phase of Keystone will extend to Oklahoma, and should be ready in 2011. The company has already signed contracts with shippers for 83% of Keystone’s capacity. These deals have an average term of 18 years. That cuts the risk of this investment.

TransCanada plans to add a third phase to this project. Called Keystone XL, this new pipeline will supply oil refineries in Texas.

U.S. environmentalists and politicians have criticized Keystone XL. In response, TransCanada will reduce the pressure of the oil in the pipeline. That will lower the line’s capacity, but it should help TransCanada secure approval for the project.

However, long-term demand for Canadian oil should continue to rise, particularly if the U.S. continues to curtail production in the Gulf of Mexico in response to the BP oil spill. TransCanada hopes to complete Keystone XL by the end of 2013.

Aside from Keystone, TransCanada will build new natural-gas-fired power plants in Ontario and Arizona. As well, it plans to refurbish reactors at the Bruce Power and build new wind farms.

You can get our full analysis, including our clear buy/sell/hold advice, on TransCanada and 19 other safety-conscious investments in the latest Canadian Wealth Advisor. What’s more, you get this issue free when you subscribe today. Click here to learn how.