Fortis Stock: Buy, Sell, or Hold?

When it comes to passive income, utility stocks tend to come up a lot. These are companies that tend to have decades behind them of dividend payments. And in the case of Fortis (TSX:FTS), that couldn’t be more true.

Fortis stock is now one of just two Dividend Kings on the TSX today. That’s over 50 consecutive years of dividend increases! Yet, is that enough? Shares are on par with where they were a year ago. Utility stocks fell after rising dramatically. And earnings haven’t been great. So what should investors do with Fortis stock today?

Getting into earnings

First, let’s look at the most recent earnings results for Fortis stock. The company’s third quarter saw profit come up only slightly year-over-year to $394 million from $326 million the year before. The utility stock reported revenue of $2.7 billion for the quarter as well, up from $2.6 billion in 2022.

The increase in profits came from Fortis stock seeing approval for the FortisBC utilities back in September. Furthermore, the company saw higher retail revenue thanks to warmer weather in Arizona, resulting in higher customer rates from Tucson Electric Power.

However, earnings weren’t any higher as the company had to deal with lower long-term wholesale and transmission revenue. Further, there was the issue of higher costs from both operations and corporate finance.

Analyst cuts

Fortis stock then went on to receive cuts from analysts after the less-than-awesome earnings report. While it still remains a buy, analysts weren’t that happy to see costs come up, and regulatory decisions holding back the stock.

The quarterly report was solid, and the company should go on to have a strong capital program, in the words of one analyst. After all, utility energy infrastructure investments remains strong in North America, and likely only to get stronger as this infrastructure expands. This should continue to support growth of 4% to 6% in its dividend all the way through 2028.

Therefore, analysts still believe that Fortis stock is an excellent portfolio staple. There is low risk in utilities, and the company continues to dominate the field. Therefore, it’s a solid buy for the long term. And with the recent sale of its Aitken Creek Natural Gas Storage Facility in British Columbia, it now has about $400 million back on the books.

What you could get

So not only does Fortis stock look like a deal, but so does its dividend. Fortis stock currently trades with a 4.27% dividend yield, which is higher than its five-year average of 4.08%. Take that into consideration, and add in its 52-week highs, and investors could achieve strong passive income.

How much? Let’s consider you put $2,000 towards Fortis stock on the TSX today. You then see shares climb back to 52-week highs. Here is how much passive income you could create from returns and dividends.

In this example, you could bring in $294 from returns and $87.32 in dividends. That’s total passive income of $381.32! So certainly consider Fortis stock as a buy today, and a hold for the near and long-term future.