Fortis Stock – A Value Stock Worth Owning

Following a volatile 2022, among stellar investment opportunities now is this value stock worth owning.

| More on:
Golden crown on a red velvet background

Image source: Getty Images

2022 was a year of intense volatility. Not only did the market contend with the end of COVID-induced closures and global supply issues, but steeply rising interest rates gave us the highest inflation levels in several decades. That led to the market losing steam and rendering otherwise stellar investments value stocks worth owning at cheaper prices.

One such value stock to consider for your portfolio is Fortis (TSX:FTS).

All about Fortis

Fortis is one of the largest utilities on the continent. The company boasts 10 operating regions that blanket parts of Canada, the U.S., and the Caribbean. Additionally, the defensive appeal of Fortis’ reliable business model makes it a must-have during these volatile times.

But what makes Fortis a value stock worth owning?

Like most of the market, Fortis saw its stock price dip in 2022. As of the time of writing, Fortis is still down over 7% over the trailing 12-month period.

Despite that dip, there are several compelling reasons why Fortis, even at its current discount should be part of your well-diversified portfolio.

Reliable business, reliable revenue

First, let’s talk about Fortis’ business model. Fortis operates one of the most stable business models on the market. In short, the company generates a stable revenue stream that is backed by long-term regulatory contracts. That recurring revenue stream allows the company to invest in growth and pay a very generous dividend.

That growth potential is the second noteworthy point. Fortis has taken an aggressive stance towards growth, which has allowed the company to rapidly become one of the largest utilities in North America.

In recent years that growth has shifted internally. Specifically, Fortis has focused on upgrading existing infrastructure and transitioning over to renewables. This puts Fortis in an advantageous position over many of its traditional fossil-fuel peers.

More importantly, prospective investors should note the defensive appeal of investing in a utility like Fortis during volatile periods.

Fortis provides a juicy income too

Finally, let’s talk dividends. Fortis offers an appetizing quarterly dividend that works out to a yield of 4.16%, making it one of the better-paying yields on the market.

To put some context into that income potential, let’s consider an investment of $40,000. Investors can expect to earn an income of over $1,660 in just the first year, which leads to another unique point.

Fortis has provided investors with an annual bump to that income for a whopping 49 consecutive years. Additionally, Fortis has plans to continue that cadence with annual bumps over the next several years averaging 6%.

This also means that following the next uptick expected later this year, Fortis will become only the second stock on the market to achieve Dividend King status with 50 consecutive years of increases. That factor alone makes Fortis a solid pick for any long-term portfolio.

Fortis: A value stock worth owning

No investment is without risk. Fortunately, in the case of Fortis, that risk is minimal owing to the defensive nature of Fortis’ business. If anything, the defensive appeal of Fortis makes it a great buy-and-forget candidate as part of any well-diversified portfolio.

Throw in the current discount on the stock and you have a stellar value stock worth owning.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Demetris Afxentiou has positions in Fortis. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.

More on Dividend Stocks

consider the options
Dividend Stocks

How Much to Invest to Get $500 in Dividends Every Month

Do you want to generate dividends every month? It’s not as hard as it seems, and this trio of stocks…

Read more »

Payday ringed on a calendar
Dividend Stocks

This 9.4 Percent Dividend Stock Pays Cash Every Month

Here's how BTB REIT (TSX:BTB.UN) could sooth your high-yield monthly dividend income cravings.

Read more »

Gas pipelines
Dividend Stocks

How Much Will Enbridge Pay in Dividends This Year?

Here's what investors should expect from Enbridge's dividend in 2024.

Read more »

grow dividends
Dividend Stocks

3 Canadian Stocks With a Real Chance of Doubling Your TFSA’s Value

Three outperforming Canadian stocks can help TFSA investors double their account balances.

Read more »

Hand writing Time for Action concept with red marker on transparent wipe board.
Dividend Stocks

3 No-Brainer Stocks I’d Buy Right Now Without Hesitation

At any given time, the market may have certain stocks that offer a powerful combination of reliability, potential, valuation, etc.,…

Read more »

money cash dividends
Dividend Stocks

This 8.39% Dividend Stock Can Pay $100 Cash Every Month

Consider investing in this monthly dividend stock at current levels to lock in high-yielding monthly distributions to create a good…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

Here’s the Average TFSA Balance in 2024

The Bank of Montreal (TSX:BMO) says that the average TFSA balance is $41,510, far below the maximum.

Read more »

A glass jar resting on its side with Canadian banknotes and change inside.
Dividend Stocks

Investors: Here’s How to Make $1,000 Each Month in Retirement

Here's how you can easily make $1,000 in monthly passive income in retirement in Canada, without taking on too much…

Read more »