3 Reasons I’m Buying Fortis Stock Today

I’m buying Fortis (TSX:FTS). Why? The company offers investors a stable revenue stream, handsome dividend, and growth potential.

Finding that perfect mix of investments can provide the boost your portfolio needs today for a more comforting retirement. Part of that boost relies on picking stocks which can provide a recurring and stable income stream for decades to come. And that’s part of the reason why I’m buying Fortis (TSX: FTS) stock today.

Utility, wind power

Image source: Getty Images

Let’s talk about Fortis

For those who are unaware of Fortis, the company is one of the largest utilities in North America. Fortis has operations spanning 10 operating regions across Canada, the US, and the Caribbean. Part of the reason why utilities like Fortis are such great investments stems from the lucrative business model they follow.

In short, utility stocks like Fortis generate a recurring revenue stream backed by long-term regulated contracts. In other words, as long as Fortis continues to provide utility service to its 3.4 million customers, it continues to generate a recurring and stable revenue stream.

And those long-term contracts I mentioned above are often several decades in duration. That stability allows Fortis to invest in growth and pay investors a very generous dividend.

Why am I buying Fortis?

Fortis is a superb long-term pick for nearly every investor because the stock benefits from being one of the most defensive stocks on the market. The company has also taken an aggressive stance on growth, acting utterly contrary to its stereotype as a boring investment.

Over the past decade, Fortis has invested in increasingly larger acquisitions allowing it to branch out to new markets. This has helped make the company the $64-billion behemoth it is today. More recently, that growth has turned towards upgrading and transitioning many of its facilities over to renewables.

In fact, the company has allocated billions in a capital improvement fund over the next few years to continue this venture.

One of the the main reasons why investors flock toward Fortis is for its dividend. Specifically, Fortis offers a quarterly dividend that currently pays out 4.23%. This means that investors with $25,000 to invest in Fortis as part of a larger, well-diversified portfolio can expect to generate an income of over $1,050 in the first year.

The reason I say the first year is thanks to another reason why I’m buying Fortis. The company has provided investors with an annual uptick to that dividend for a whopping 49 consecutive years. Fortis is also on track for that 50th consecutive increase within the next few months. This will make Fortis only the second dividend king in Canada.

For some investors, that buy-and-forget appeal may be reason enough to invest in Fortis. Throw in the incredibly defensive appeal of owning a utility stock that can weather market volatility, and you have a great option.

I’m buying Fortis. How about you?

In short, investors looking to buy a long-term stock that can provide both growth and a juicy dividend will be very happy with a Fortis investment.

As of the time of writing, Fortis trades relatively flat year to date. This is yet one more reason why I’m buying Fortis.

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

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