The Globe and Mail reports in its Saturday edition that Hydro One is facing an unusual problem: it is performing too well, with a 43-per-cent share price rally over the past three years, excluding dividends. The Globe's David Berman writes that this is notable for a regulated utility, especially amid rising interest rates that have affected dividend-paying stocks. Hydro One has outperformed peers like Fortis and Emera. Hydro One's recent gains have significantly inflated its valuation, creating a challenge for future growth. The stock trades at about 25 times trailing earnings, well above the valuations of its biggest peers, which trade at about 20 times trailing earnings. What is more, the rising share price has pushed Hydro One's dividend yield to just 2.6 per cent. That is below the yield from the S&P/TSX 60 blue chip index and far lower than the yields from Emera and Fortis, which are 4.7 per cent and 3.7 per cent. Hydro One's strong performance is no mystery: Investors favour a stock that can endure economic downturns while providing decent growth. "The market is rewarding high-quality, defensive companies with visible growth, such as Hydro One, with higher valuations," said Scotiabank's Robert Hope.