Finding the right mix of stocks today can make a huge difference in your portfolio tomorrow. One of the stocks that can make that difference is Fortis (TSX:FTS). Here are several key things about Fortis stock that both seasoned and new investors alike need to know.
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Fortis is a defensive titan
For those that are unfamiliar with Fortis, the company is one of the largest utilities in North America with 3.4 million utility customers. Those customers, which include both electric and gas segments, are spread across 10 operating regions spanning Canada, the U.S. and the Caribbean.
One of the many things about Fortis that investors appreciate is the company’s defensive appeal. Utilities are incredibly defensive investments, owing to their lucrative business model. In short, utilities generate recurring revenue in exchange for providing a service. That utility service is backed by long-term regulated contracts that can span decades.
What this means is that Fortis generates a recurring and stable revenue stream that is largely immune to market volatility and downturns.
In terms of results, we’re still a few weeks out from Fortis’ Q4 results, but we can look at how the company performed in Q3. In that quarter, Fortis earned $394 million, or $0.81 per common share. By way of comparison, in the same period last year, Fortis earned just $326 million, or $0.68 per common share.
That may be reason alone when contemplating things about Fortis stock that investors should consider, but there’s still more.
Fortis offers a growing, stable income
There are plenty of reasons why Fortis continues to attract investors. One of the main things about Fortis stock that investors love is the dividend the company offers.
As of the time of writing, Fortis offers a tasty 4.33% yield that is paid out quarterly. For prospective investors who invest $30,000 into Fortis, they can expect to generate a first-year income of just over $1,300.
The reason I say first-year income is because of another key fact about Fortis stock. Fortis has provided investors with that tasty quarterly dividend for an incredible 50 consecutive years without fail. Even better, Fortis has plans to continue that practice through 2028 averaging 4-6% increases.
In other words, investors with longer-term timelines who aren’t ready to draw on that income just yet can choose to reinvest that income. This will allow any eventual income stream to grow until needed.
It’s a great time to buy right now
As of the time of writing, Fortis trades at just over $53, which is closer to its 52-week low of $49.82. By comparison, the stock’s 52-week high sits at $62. In short, Fortis trades at a decent discount right now. Fortis trades down nearly 5% over the trailing 12-month period and nearly 10% over the trailing two years.
Adding to that appeal is the future potential that comes from investing in Fortis. Fortis has taken a very aggressive stance on expansion. That’s one of the reasons why the company has quickly grown from a $390 million operation to a $66 billion behemoth in under 40 years.
In recent years that appetite for growth has shifted to transitioning to renewables and upgrading existing facilities.
Final thoughts: It’s all about Fortis stock!
No stock, even a defensive titan like Fortis, is without some risk. Fortunately, Fortis offers investors a well-diversified and stable business that continues to see growth. The company also offers one of the most stable and growing dividends on the market.
In my opinion, Fortis is a stellar long-term option that should be a core holding in any, well-diversified portfolio.
