With its cash flow from regulated power contracts, this utility is well positioned to withstand the fallout from COVID-19.
The company applies that solid revenue to build its operations while cutting its reliance on fossil fuel projects and at the same time building a base for your long-term dividend increases.
FORTIS INC. (Toronto symbol FTS; www.fortisinc.com) lets you tap top-quality electrical utilities across Canada, the U.S. and the Caribbean. The company is the main supplier of electrical power in Newfoundland and PEI and also distributes natural gas in B.C., Arizona and New York State; it operates 25,100 kilometres of high-voltage power lines in the U.S. Midwest, and now gets about 65% of its earnings from its U.S. businesses.
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In the past few years, Fortis has cut its reliance on Atlantic Canada with acquisitions in other parts of Canada and the U.S. That has brightened the outlook for investors.
The company recently sold 22.9 million shares at $52.15 each for net proceeds of $1.17 billion. It plans to use the cash to pay down its total debt of $22.3 billion (as of December 31, 2019). That’s a high 83% of Fortis’s market cap. However, steady cash flows from its regulated businesses give it plenty of room to service that debt.
Dividend Stocks: Upgrade plans will cost $18.8 billion over 4 years
In the fourth quarter, Fortis’s revenue rose 5.4%, to $2.33 billion from $2.21 billion a year earlier. The increase was due to gains at the company’s ITC power transmission operations in eight U.S. states. Excluding one-time items, earnings rose 14.9%, to $277.0 million, or $0.62 a share. A year earlier it earned $241.0 million, or $0.56. Note—this reporting period came before the full economic impact of COVID-19
Fortis plans to spend $18.8 billion on new projects and upgrades to its operations between 2020 and 2024.
Most of that spending will go towards improving existing operations, in particular the conversion of its fossil fuel-burning power plants to renewable sources. The company also plans to improve the reliability of its transmission lines.
With the December 2019, payment, Fortis increased your quarterly dividend by 6.1%, to $0.4775 a share from $0.45. The new annual rate of $1.91 yields 3.6%. The company now plans to raise your rate 6% each year through 2023.
This stock has a HIGHEST Dividend Sustainability Rating.*
*TSI Network’s Dividend Sustainability Ratings® were designed to help our subscribers find exactly the safest dividend stocks for their portfolio. We apply this exclusive ratings system to over 80 stocks in TSI Dividend Advisor. If you are a free subscriber to our daily advice service, you are only seeing a small portion of these stocks.
When you subscribe to TSI Dividend Advisor you have access to ALL our top-ranked dividend stocks—ones with sustainable and growing dividends as well as potential for capital-gains.
For more information on our Dividend Sustainability Ratings® and how you can subscribe to TSI Dividend Advisor, please click here.
We don’t maintain any model portfolios. Pat McKeough says that there are a number of difficulties with recommending a model portfolio for all investors. The main one is that each individual has different objectives, acceptable risk levels and so on. For example, conservative or income-seeking investors may want to emphasize utilities and banks for their high and generally secure dividends. More aggressive investors might want to increase their portfolio weightings in resources or manufacturing stocks.
As well, any model portfolio would need to be continually monitored and updated as individual stocks rise and fall in value and as a percentage of the total.
In addition, different investors may be more comfortable holding a larger or smaller number of stocks, income trusts or REITS or ETFs in their portfolios. So, it’s difficult to set any specific number of stocks in a model portfolio.
However, as mentioned, conservative or income-seeking investors may want to emphasize utilities and Canadian banks for their high, generally secure dividends, but you’ll still want to spread your investments out across the five main economic sectors: Manufacturing & Industry, Resources, Consumer, Finance and Utilities.
Learn everything you need to know in
'7 Winning Strategies for Dividend Investors'
FREE Special Report from The Successful Investor.
The Best Canadian Dividend Stocks to Buy:
REITS Canada and other Top Canadian Dividend Stocks.
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Which publication maintains a model portfolio?
We don’t maintain any model portfolios. Pat McKeough says that there are a number of difficulties with recommending a model portfolio for all investors. The main one is that each individual has different objectives, acceptable risk levels and so on. For example, conservative or income-seeking investors may want to emphasize utilities and banks for their high and generally secure dividends. More aggressive investors might want to increase their portfolio weightings in resources or manufacturing stocks.
As well, any model portfolio would need to be continually monitored and updated as individual stocks rise and fall in value and as a percentage of the total.
In addition, different investors may be more comfortable holding a larger or smaller number of stocks, income trusts or REITS or ETFs in their portfolios. So, it’s difficult to set any specific number of stocks in a model portfolio.
However, as mentioned, conservative or income-seeking investors may want to emphasize utilities and Canadian banks for their high, generally secure dividends, but you’ll still want to spread your investments out across the five main economic sectors: Manufacturing & Industry, Resources, Consumer, Finance and Utilities.