Fortis (TSX:FTS)(NYSE:FTS) stock is as stable as stocks go. It’s perfect for conservative and risk-averse investors. Its predictable profitability has allowed it to be one of two Canadian Dividend Aristocrats with continuous dividend increases for 46 years or longer.
Fortis stock has a 10-year dividend growth rate of about 6%. The top North American utility is so confident about its growth that it already announced its intention to continue increasing its dividend at an average annual growth rate of 6% through 2024.
Its payout ratio has been at about 70%, and that’s not about to change.
Predictable Business & Profitability
Fortis has 10 utility operations diversified across Canada, the U.S., and the Caribbean. It’s a regulated utility with a focus on electricity/natural gas transmission and distribution assets and highly predictable earnings.
Thanks to management’s excellent decisions in making strategic U.S. acquisitions: Central Hudson (in 2013), UNS Energy (in 2014), and ITC Holdings (in 2016), especially when the loonie was super strong against the greenback in 2013 and 2014, Fortis has greatly diversified its operations and now earns about 65% of its earnings from the U.S.
Fortis is a stock I’d love to own for its stability, but not at the current price.
The stock has appreciated more than 20% in the last 12 months and is nowhere near attractive. It’s not worth it to buy Fortis right now due to its relatively high valuation and low yield.
Wait for a dip of +10% before diving in.
Unfortunately, we have maxed out the word limit for this excerpt. But you can read the Seeking Alpha article (with graphs and images) here: Fortis: It’s Not Worth It
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Disclaimer: I am not a certified financial advisor. This article is for educational purposes, so consult a financial advisor and or tax professional if necessary before making any investment decisions.
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