Fortis Inc. (TSX:FTS)(NYSE:FTS) and Canadian Utilities Limited (TSX:CU) are the undisputed kings of dividend growth with active streaks of more than 40 consecutive years of increases. As Foolish investors, we know that investing in dividend-growth stocks is one of the most powerful and time-proven strategies to build wealth, so let’s take a closer look at these companies to determine which would be the best fit for your portfolio.
Fortis Inc.
Fortis is the largest investor-owned utility in Canada by assets and one of the 15 largest in North America. Its subsidiaries include ITC, UNS Energy, Newfoundland Power, FortisAlberta, Maritime Electric, and Central Hudson Gas & Electric.
Fortis currently pays a quarterly dividend of $0.40 per share, equal to $1.60 per share on an annualized basis, and this gives it a 3.5% yield at today’s levels.
As mentioned before, Fortis is one of the top dividend-growth stocks around. It has raised its annual dividend payment for 43 consecutive years, and its 6.7% hike in September has it positioned for 2017 to mark the 44th consecutive year with an increase.
Investors must also note that Fortis has a dividend-growth program in place that calls for annual growth of approximately 6% through 2021, and I think its very strong financial performance, including its 15.9% year-over-year increase in adjusted net earnings to $1.31 per share and its 27.8% year-over-year increase in operating cash flow to $1.19 billion in the first half of 2017, will allow it to complete this program and announce a new one that extends into the 2030s.
Canadian Utilities Limited
Canadian Utilities is the principal subsidiary of ATCO Ltd., which is a diversified global corporation with operations in the structures and logistics, electricity, pipelines and liquids, and retail energy industries around the world.
Canadian Utilities pays a quarterly dividend of $0.3575 per share, equal to $1.43 per share on an annualized basis, giving it a 3.6% yield today.
Like Fortis, Canadian Utilities is a dividend-growth aristocrat. It has raised its annual dividend payment for 44 consecutive years, and its 10% hike in January has it on pace for 2017 to mark the 45th consecutive year with an increase.
I think Canadian Utilities will continue to deliver dividend growth to its shareholders going forward as well. I think its very strong financial performance, including its 4.9% year-over-year increase in adjusted earnings to $344 million and its 11.2% year-over-year increase in funds generated by operations to $912 million in the first half of 2017, and its ongoing expansion efforts that will drive future growth, including its $683 million in investments in capital growth projects in the first half of 2017, will allow its streak of annual dividend increases to continue for the foreseeable future.
Which of these dividend-growth kings belongs in your portfolio?
I think Fortis and Canadian Utilities are two of the best dividend stocks in the market today, so take a closer look at each and strongly consider making one of them a core holding in your portfolio.
