Are you new to stock market investing? The TSX is never short of excellent investment opportunities for those willing to put in the effort to identify them. You can take several possible approaches in stock market investing to become wealthy. Seasoned stock market investors know and understand the value of buying the stock of great companies and holding onto them forever.
Having a long-term perspective on stock market investing is the only way to genuinely build generational wealth. At the Motley Fool, we believe in the power of having a long investment horizon for success as an investor.
As a beginner, it is important not to take unnecessary risks with your investment capital. Being smart with where and how much you invest as a beginner can set the foundations for a long and fruitful career.
Investing at low prices and selling when high is a good approach. However, it might be better to begin investing with solid bets to create the foundations of a successful self-directed investment portfolio. Once you have a degree of stability in your portfolio and a better understanding of the markets, you can consider indulging yourself with riskier assets for rapid growth potential.
It might be better to initially focus on safe investments by looking for companies with solid fundamentals, business models you can understand, great management, and essential goods or services.
Fortis is a $27.45 billion market capitalization utility holdings company. It owns and operates several electricity and natural gas utility businesses across Canada, the U.S., the Caribbean, and Central America. Utility businesses provide essential services to their customers.
People tend to cut down expenses during troubling economic environments. Regardless of how bad things get, people will always need electricity and natural gas supplies, and Fortis is arguably a leader in Canada’s utility industry.
Fortis operates in a highly regulated and largely consolidated industry. It means that the company’s revenues are predictable. Since it generates most of its revenue through long-term contracted assets, its cash flows are also virtually guaranteed. It comes as no surprise that Fortis stock has exceptionally low volatility. As of this writing, Fortis has a beta of just 0.15, which is much lower than the market at one.
Its low volatility makes it an excellent defensive pick, especially during bear markets and market crashes.
Its defensive nature is not the only reason Fortis stock can be excellent for beginners. Fortis is also a Canadian Dividend Aristocrat with a 48-year dividend-growth streak. The company pays its investors a portion of its profits on a quarterly schedule. Not only does it pay them regularly, but it has also been increasing its payouts to shareholders for the last 48 years.
As of this writing, Fortis stock trades for $56.58 per share and boasts a juicy 3.78% dividend yield. The company has an enterprise value (EV) of $56.37 billion and an EV-to-EBITDA (earnings before interest, taxes, depreciation, and amortization) ratio of 13.17. Its price-to-earnings ratio for the last 12 months was 22.14. Analysts have given Fortis stock a 12-month price forecast with a median target of $61.29 per share, representing a return potential of 8.32%.
While it might not offer exciting growth in the next 12 months, Fortis stock has a strong record of long-term growth and dividend hikes. It can be an ideal asset to own when you start building your self-directed investment portfolio.