Finding a good mix of investments that can provide growth and income-producing potential should be a goal of all investors. And while the market gives us plenty of options to choose from, some stocks are better options to consider during times of volatility. Here’s a look at one such stock to buy in March 2023.
Don’t be fooled! This is a very appealing (boring) stock
The stock that investors should be looking to buy in March 2023 is Fortis (TSX:FTS). For those that are unfamiliar with the stock, Fortis is one of the largest utility stocks in North America. In total, the company boasts 10 operating regions across Canada, the U.S., and the Caribbean.
But why is Fortis a buy in March 2023?
To answer that, let’s talk about Fortis’ lucrative business model.
That business model is fairly simple. Fortis provides utility services and, in turn, the company is compensated. The amount of compensation is stipulated in long-term contracts, which often run decades in duration.
In other words, Fortis generates a stable and recurring revenue stream by providing its utility service. Prospective investors should also note that the stability of that business model makes Fortis one of the most defensive investments on the market.
And unlike your TV or grocery bill, you can’t really trim your electric bill.
That reliable revenue stream allows Fortis to invest in growth initiatives and pay out a generous quarterly dividend (more on that in a moment).
The stability of Fortis’ business model is one reason why some often equate the stock to a boring investment. The argument states that after paying out dividends, there is little room (or incentive) for the utility to invest in growth.
If anything, the inverse is true when it comes to Fortis. Fortis has taken an aggressive stance towards expansion, which is one reason why the company has grown to a $58 billion behemoth in just over four decades.
In recent years, Fortis has focused that growth on its existing operations. Specifically, the company is investing billions into upgrading existing facilities and transitioning others to renewables.
What about that income?
One of the main reasons why investors continue to flock to Fortis is the company’s quarterly dividend. As of the time of writing, that dividend works out to a juicy yield of 3.95%.
This means that a $40,000 investment in Fortis will generate an income of $1,580. And that’s not even the best part.
Fortis has provided an annual uptick to that dividend for the past 49 consecutive years, with plans to continue the practice through 2027. This means that Fortis is on track to become the second Dividend King in Canada.
Newer investors often shy away from income stocks like Fortis, instead opting for growth-focused options. What those prospective investors may not realize is that those dividends can be reinvested until needed. This will effectively let your investment grow on autopilot until needed.
In other words, Fortis is a superb buy-and-forget option to buy in March 2023.
Will you consider buying this stock in March 2023?
No investment is without risk, and that includes Fortis. Fortunately, Fortis does offer investors a stable and growing dividend, backed by one of the most defensive companies on the market.
In my opinion, both new and seasoned investors should consider adding Fortis as part of a larger, well-diversified portfolio.
