Consequently, it can afford to fund its growth plan from excess cash flows. It expects dividends should rise in congruence with its rate base growth. The third group and probably the most important is utilities companies. The Motley Fool recommends FORTIS INC. A regulated utility company is a company that owns the means of generation, the poles, wires, meter boxes, and whatever else is needed to supply power to the consumer. Did I mention that Fortis just declared a 5.8% dividend increase for its fourth quarter 2020 dividend payment? Fortis expects to grow its dividend at an annual pace of 6% through 2025. All this combined, and investors stand to enjoy a very attractive, low-risk income/capital growth profile that can be locked in today! Renowned Canadian investor Iain Butler just named 10 stocks for Canadians to buy TODAY. All rights reserved. Despite concerns that always arise from a leadership transition, Fortis’s five-year outlook looks attractive for the stock. Fortis is not a company that is going to blow you away with growth. Lets have a look at Fortis’s dividend Fortis holds the second longest dividend growth streak in the country at 47 years. With a five-year compound annual growth rate (CAGR) of 10%, Fortis stock has outperformed both the TSX and the S&P/TSX Capped Utilities index. However, considering the current environment we’re in economically and interest rates hitting rock bottom, don’t expect the company to get any cheaper. Stocktrades offers strictly investment opinions, not investment advice.
It also announced that its current CEO Barry Perry will be retiring at the end of the year. By owning Fortis stock, you get five years of stable, accretive, compounded annual growth of about 6%.
A lot of investors look to Fortis for its dividend, and as a result the company keeps meticulous track of growth estimates and payout ratios.
Fortis stock has a dividend yield close to 4% and further dividend growth is expected sooner or later. Its capital plan is expected to be funded from internal cash from operations, debt at the subsidiary level, and equity from its corporate dividend-reinvestment plan. Despite the pandemic or recession, the company is convinced that it will not slow down its growth plan. Current as of October 20, 2020. A similar company in Canadian utilities owns the longest streak, and I’d expect both of them to achieve Dividend King status with relative ease. In its final quarter of 2020, Fortis stated that it would be bumping its Capital Plan from $18.8 billion to $19.6 billion over the next 5 years. As we can see, Fortis has historically kept its dividend payout ratio in the 65-73% range with a few outliers. Check out Stockrover Here! But most importantly, it is a rate that essentially guarantees a profit for the utility company. A stock’s dividend reliability is determined by a healthy payout ratio that is higher than other stocks. Fortis reported a strong second quarter regardless of Covid-19 headwinds. In fact, we’re more so looking into what the company is going to be able to do to continue consistent dividend growth. $0.4775 per share on the Common Shares of the Corporation, payable on March 1, 2020 to the Shareholders of Record at the close of business on February 18, 2020. It’s one of the more well known utilities here in Canada, and operates in an industry that is highly regulated, leading to extensive barriers to entry and stable revenue. Fortis is one of Canada’s best Dividend Aristocrat stocks. Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada. In order to understand how a company like Fortis has grown its dividend for that long and at such a consistent pace, we need to understand how the company generates such consistent cash flow. Adjusted net earnings were $0.56 per common share, up from $0.54 in the same quarter last year. The company currently has over 3.3 million electricity and gas customers and has over 16,000 miles of high-voltage transmission lines in operation south of the border. Microsoft may earn an Affiliate Commission if you purchase something through recommended links in this article. The company’s $18.8 billion five-year investment plan and dividend growth forecast remains unchanged.
The company generates 99% of earnings through regulated utilities.
That should tell you a lot about the company and my overall confidence in it. The investment plan is expected to increase the rate base from $28 billion in 2019 to $34.5 billion by 2022 and $38.4 billion in 2019 by 2024, which will translate into three- and five-year compound annual growth rates of 7.2% and 6.5%, respectively. In fact, your dividend payments would have completely covered the cost of your stock ($7.70/share if you bought in January 2000) in only 10 years.
Fortis stock has a very low beta 0.04, so it’s much less volatile than the market and less risky. Why is the company’s dividend so safe, and how will the company do despite poor economic outlook? Fortis stock is a Canadian Dividend All-Star. Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group. Fortis currently yields around 3.6% at the time of writing and has grown its dividend by 7.38% annually over the last 5 years. Fortis has acquired properties across Canada, the United States, and the Caribbean; most recently, it signed Canada’s first agreement to produce LNG (liquid natural gas) in China. With Fortis you get a 3.6% dividend yield today. In fact, the company has an excellent image on its investor relations page tracking its payout history over the last 12 years. The Motley Fool recommends FORTIS INC. Not to alarm you, but you’re about to miss an important event. At that time, Fortis was trading in the high $50 range, all time highs. All rights reserved. That is a three- and five-year compounded annual growth rate of 6.5% and 6%, respectively! It plans to invest $19.6 billion across its electric and gas utility segments. FTS's most recent quarterly dividend payment was made to shareholders of record on Tuesday, September 1. While this stock may not experience the same growth rate (13.9% average annual returns since 2000) as in the first two decades of the 2000s, management recently affirmed a pretty attractive flight path forward. Right now in the low to mid $50 range, the company is trading at a 22% premium to its 5 year historical price to sales and a 11% premium to its historical price to earnings. Find the latest dividend history for Fortis Inc. Common Shares (FTS) at Nasdaq.com.
As winter approaches in North America, people will be using more electricity. I understand I can unsubscribe from these updates at any time. You can see why Fortis should outperform the market if it falls by the end of 2020. Fool contributor Stephanie Bedard-Chateauneuf has no position in any of the stocks mentioned. When we look at a company’s dividend, we often analyze how safe the dividend is and whether or not it will be cut.
Fortis has a very safe business model, where 99% of its cash flows are regulated. To qualify for a spot on the Dividend All-Star list, a company must increase its dividend payout for five consecutive years.
This is a 3% increase from 2019 numbers, but is hardly anything to get concerned about.
Fortis (TSX:FTS) Stock: One of the Safest Dividend Stocks on the TSX. Fortis Inc. offers a Dividend Reinvestment Plan (“DRIP”) to Common Shareholders as a convenient method of increasing their investments in the Corporation. The company’s increase of 5.8% nearly hits this mark in 2020, and I imagine they’ll make up the 0.2% somewhere down the line. Copyright 2020 Stocktrades Ltd©. If yes, you should consider Fortis (TSX:FTS)(NYSE:FTS) stock. All content on Stocktrades is the views of the individual reporters.
The boost was likely a result of the low interest rate environment we’ve quickly transitioned to due to COVID-19.
There is no predictable reason why the company will not honor the commitments it has made. Fortis has a strong track record and is well positioned to weather the ongoing pandemic. From there, the company discusses an appropriate electricity rate with the municipality, which does one of two things. We could see plenty of new wealth-building opportunities in 2020 that would potentially dwarf any that came before them.
The utility company raised its dividend during 46 consecutive years. In fact, the company is only 3 years away from achieving Dividend King status, which in the United States is 50 consecutive years of dividend growth. (Offered to Registered Shareholders.) Market Cap: $25.52 billion Forward P/E: 20.99 Yield: 3.68% Dividend Growth Streak: 46 years Payout Ratio (Earnings): 75.79% Payout Ratio (Free Cash Flows): Premium Members Only Payout Ratio (Operating Cash Flows): Premium Members Only 1 Yr Div Growth Rate: 5.94% 5 Yr Div Growth Rate: Premium Members Only Stocktrades Growth Score: Premium Members Only Stocktrades Dividend Safety Score: Premium Members Only. When we look to something like operating cash flows, the dividend looks even safer, making up only 33.47% of OCFs. Returns since inception, October 2013.
Fool contributor Robin Brown has no position in any of the stocks mentioned. In fact, the company is only 3 years away from achieving Dividend King status, which in the United States is 50 consecutive years of dividend growth. That dividend only consumes around 70% of Fortis’s cash flows. It has raised its dividend 47 consecutive years in a row. Fortis has $4.8 billion in unused credit facilities. Say you bought the stock in the year 2000 and just tucked it away. Are you looking for a great dividend stock?
As you can see by the chart, the company has significantly outperformed the TSX Index over the last 13 years. The remaining 18% comes from the commercial sector. Fortis holds the second longest dividend growth streak in the country at 47 years.
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