Kalkine Media - In the expansive landscape of investment options, Fortis (TSX: TSX:FTS) stands out as a compelling choice for growth and income investors. Explore why Fortis, a TSX dividend stock, deserves attention and why acquiring it now is a prudent move.
Reason 1- You Need Some Defense
Fortis (TSX: FTS) stands as one of the market's most defensive stocks, making it an appealing option for investors seeking stability. For those unfamiliar with Fortis, it is a major player in the utilities sector, operating in Canada, the U.S., and the Caribbean.
What defines Fortis as a defensive stock? It's the robust business model underpinning its operations. As a utility, Fortis operates in a highly regulated environment, ensuring a steady and recurring revenue stream backed by long-term regulated contracts. A striking 99% of Fortis's operations fall under regulation, encompassing both electric (82%) and gas (17%) segments. This regulatory solidity not only empowers Fortis to invest in growth but also facilitates the distribution of a substantial dividend, making Fortis stock less volatile compared to alternatives.
Reason 2- Timing is Important. Income is, Too
Despite Fortis offering a highly defensive operation, the stock has experienced a notable 11.9% decline over the trailing two-year period. This dip presents an opportune moment for long-term investors to contemplate acquiring Fortis, especially considering the simultaneous increase in its dividend yield. At present, the yield on Fortis's quarterly dividend stands at a commendable 4.45%.
For investors deploying $30,000 into Fortis stock within a well-diversified portfolio, this could translate to a first-year income exceeding $1,330. Noteworthy is Fortis's remarkable track record of consecutive dividend increases for 50 years, solidifying its position as one of the two Dividend Kings in the market. The company is committed to maintaining this impressive cadence in the coming years, making Fortis an appealing buy-and-forget candidate for long-term portfolios.
Reason 3- Growth is Real
Contrary to the stereotype associated with utility stocks as dull and lacking growth potential, Fortis defies expectations in two significant ways.
Firstly, the company consistently provides substantial annual upticks to its dividend. Fortis aims for increases ranging from 4-6% over the next five years, making it an attractive option for income-oriented investors.
Secondly, Fortis adopts an aggressive stance on growth, showcasing a knack for identifying and pursuing growth targets. This strategic approach has propelled Fortis from a sub $400 million operation to a $66 billion behemoth in under four decades. The growth trajectory continues as Fortis executes its ambitious $25 billion, five-year capital plan, emphasizing additional growth initiatives and dividend increases.
In conclusion, Fortis (TSX:FTS) emerges not just as a utility stock but as a dual-threat investment, combining defense and growth. Whether you are a growth-focused investor or one seeking reliable income, Fortis warrants consideration for its unique position in the market and its promising future.