Fortis (TSX:FTS), a Canadian utility company, has emerged as a standout choice for income-seeking investors looking to build a sustainable source of passive income. The stock offers a stellar track record, strong financial performance, and a commitment to shareholder value. The dividend stock offers a compelling investment opportunity for Canadian investors. But let’s see how much investors could make per year in passive income, and is it enough?
Solid earnings, and a growing dividend
One of the key reasons why Fortis stock stands out as a superior dividend stock is its solid financial performance. Trading at approximately 18.5 times earnings, the company is valued favourably in the market. Investors seeking income appreciate Fortis stock’s robust 4.34% dividend yield. This offers an attractive income stream compared to traditional savings accounts or bonds.
Fortis has consistently demonstrated its commitment to rewarding its shareholders, with a history of increasing dividends. The most recent dividend increase, a 4.4% bump in the fourth-quarter common share dividend, marks an impressive milestone. The company has achieved 50 years of consecutive dividend increases. This achievement places Fortis in a prestigious club of companies on the TSX. This highlights the company’s unwavering dedication to creating value for its shareholders.
Steady stock performance
In addition to its solid financials and dividend growth, Fortis stock has also shown robust capital appreciation. Over the last year, shares have risen by 6.3%, providing investors with not only income but also capital gains. This combination of income and capital growth makes Fortis a compelling investment proposition, as it offers a well-rounded approach to building wealth.
The dividend stock is not resting on its laurels. The company’s future looks promising, driven by a substantial capital plan of $25 billion for 2024-2028. This represents a 6.3% rate base growth, offering a clear path for sustainable expansion. The increase in the capital plan reflects the Inflation Reduction Act of 2022, and a substantial portion of the investments are earmarked for transmission projects in the United States Midwest and a resource transition plan in Arizona. This growth is in line with Fortis’ overarching strategy to deliver cleaner energy while keeping it affordable and reliable for customers.
Furthermore, the company is making substantial investments in renewable energy sources, including connecting renewables to the grid, and storage investments in Arizona and the Caribbean. This forward-thinking approach aligns with the global shift towards cleaner energy, positioning Fortis as a leader in the industry.
Approximately 27% of the five-year capital plan is dedicated to cleaner energy investments, reflecting Fortis stock’s commitment to sustainability and environmental responsibility. As these projects come to fruition, they are expected to contribute to the company’s growth while supporting a cleaner, greener energy future.
The dividend stock’s extended annual dividend growth guidance of 4-6% through 2028 provides investors with a clear roadmap for income growth. This predictability is a crucial aspect of why Fortis stock stands out as a superior dividend stock. It allows investors to plan for long-term passive income. The company’s capital plan is expected to be funded primarily by cash from operations and regulated debt, indicating a strong financial foundation.
Moreover, Fortis has identified additional opportunities for growth. This includes further expansion of the electric transmission grid in the U.S., climate adaptation and grid resiliency investments, and renewable energy solutions. This diversified approach underscores the company’s commitment to embracing new technologies and evolving with the changing energy landscape.
So how much can investors gain in passive income today? Should Fortis stock reach 52-week highs, here’s how much a $15,000 investment could bring in this year.
|COMPANY||RECENT PRICE||NUMBER OF SHARES||DIVIDEND||TOTAL PAYOUT||FREQUENCY||PORTFOLIO TOTAL|
|FTS – now||$54||278||$2.36||$656.08||quarterly||$15,000|
|FTS – highs||$62||278||$2.36||$656.08||quarterly||$17,236|
Together, Fortis stock could bring in $2,236 in returns and $656.08 in dividend income. The dividend stock would therefore bring in passive income of $2892.08.
Fortis stock offers Canadian investors a compelling opportunity to build a long-term, reliable source of passive income. The dividend stock offers a strong track record, solid financial performance, consistent dividend growth, and a commitment to sustainability. FTS stock is therefore a standout choice for those seeking a balanced and sustainable investment in the ever-evolving energy sector.