If You Invested $1,000 in Fortis Stock in 2014, This Is How Much You Would Have Today

Here’s why you should consider Fortis stock and other utilities when building a retirement portfolio.

| More on:
clock time

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Ten years ago, investors who chose to invest their retirement capital in Fortis (TSX:FTS) stock could have slept soundly every night during the past decade. Their capital would have doubled, and they would have received an 84% total dividend raise on the dividend aristocrat during the period.

Fortis is an electric and gas utility with $66 billion worth of assets serving the Canadian, United States and Caribbean Islands markets. It has cultivated a proven track record of consistent dividend growth and steady capital gains over the past 50 years – a feat only outdone by Canadian Utilities Corp’s 52-year dividend growth streak.

But it’s not just the dividend that matters on Fortis stock. A $1,000 investment in the utility stock could have more than doubled your money over the past decade.

A decade of growth: Fortis stock’s total return performance since 2014

Created with Highcharts 11.4.3Fortis PriceZoom1M3M6MYTD1Y5Y10YALL21 Jan 201414 Apr 2025Zoom ▾2015201620172018201920202021202220232024202520162016201820182020202020222022202420240www.fool.ca

Over the past decade since January 2014, a $1,000 investment in Fortis stock could have grown to $2,600 today, including dividend reinvestments, representing a strong 159% total return, or a 10% compound annual return over the decade. A similar investment in the broader TSX could have grown your capital to $2,000 today.

FTS stock outperformed the broader market by nearly 60% this past decade.

What powered Fortis’ success over the past 10 years?

Organic business growth through well-planned investment programs, accretive acquisitions, especially of U.S. utilities – including a US$4.3 billion deal for UNS Energy in 2014 and US$11.8 billion acquisition of ITC Holdings in 2016 – and consistent dividend growth, powered Fortis stock’s respectable returns over the last decade.

Fortis runs a resilient, regulated business that generates highly predictable cash flows, even during recessions. The business enjoys some relative immunity from economic downturns, and management’s well-executed long-term capital investment programs have been increasing Fortis’ revenue base over time, and expanding its recurring cash flow generation capacity.

Capital gains contributed about half the total return, and dividends completed the job.

Dividends played a key role in compounding investor returns on FTS stock during the decade. The company raised its quarterly dividend by 84% from $0.32 per share for the first quarter of 2014 to $0.59 for this quarter in 2024, and averaged an annual dividend growth rate of 6.6% per annum.

The company remains upbeat about its dividend growth plans following 50 years of consistent annual dividend raises. In the current 2024-2028 largely internally funded capital investment budget, Fortis plans to inject $25 billion into the business over the next five years, grow its revenue base at a compound annual growth rate (CAGR) of 6.3% from $36.8 billion in 2023 to $49.4 billion by 2028, and sustain a 4% to 6% annual dividend raise during the period.

Beyond numbers: The true value of a Fortis stock investment

Rising interest rates and inflationary pressures in North America (which have been tamed) didn’t bode well for the highly leveraged utility with regulated prices. Fortis stock has traded largely sideways over the past three years. However, the true value of a Fortis stock investment is in the long-term stability of capital, and the promise of growing regular dividends.

Investors in FTS stock can afford to sleep well at night knowing that their capital is less volatile than other equity investments, and their dividend cheques may receive regular bumps each year. The utility stock is a commendable reliable investment for generational wealth creation purposes.

Time to buy?

Fortis stock is a solid choice for long-term investors looking to build stable retirement portfolios. The business is valued at 14 times forward free cash flow today – half its market cap-to-free cash flow multiple seen in 2022.

Its plans to completely retire coal-powered power generation plants by 2032 extend the utility’s relevance well into a green future. Meanwhile, its current five-year capital investment program could sustain 4% to 6% annual dividend growth rates over the next half decade.

A new investment in FTS could earn a 4.3% dividend yield for 2024.

Potential risks to watch include extreme weather conditions that keep reappearing with increasing frequency, increasing competition, and a tight regulatory environment that may limit the forecasted growth rate.

I’m bullish on Fortis stock’s long-term potential as a successful retirement investment. That said, diversifying your portfolio across other stocks and asset classes could lower total investment risks and further enhance your portfolio’s chances of delivering the desired investment goals.

Should you invest $1,000 in Fortis right now?

Before you buy stock in Fortis, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Fortis wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Energy Stocks

A plant grows from coins.
Energy Stocks

2 Discounted Dividend Stocks With Significant Growth Potential

If you’re in search of income and capital appreciation in the long run, here are two discounted Canadian dividend stocks…

Read more »

Senior uses a laptop computer
Energy Stocks

Here’s How Investors Can Turn $15,000 in a TFSA Into $235,000

Energy stocks aren't created equal, and this one might be one of the best of the batch.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

3 Reasons I’m Considering Enbridge Stock for a $5,000 Investment This April

I'm considering Enbridge stock to provide some defensive appeal and a juicy dividend to my long-term portfolio.

Read more »

Oil industry worker works in oilfield
Energy Stocks

CNQ Stock: Buy, Hold, or Sell Now?

CNRL is down 35% in the past year. Is CNQ stock now oversold?

Read more »

Canadian dollars in a magnifying glass
Dividend Stocks

Young Investors: How I’d Allocate $10,000 for Long-Term Potential

Young Canadians can achieve financial independence faster by saving and investing early.

Read more »

canadian energy oil
Energy Stocks

How I’d Position $7,000 in This Canadian Energy Stock for 2025 Growth Potential

Tourmaline, Canada's low-cost and largest natural gas producer, is benefiting from strong industry fundamentals.

Read more »

nuclear power plant
Energy Stocks

1 Magnificent Canadian Stock Down 40% to Buy and Hold Forever

This energy stock may be down, but do not count it out if you're looking for long-term income.

Read more »

A plant grows from coins.
Energy Stocks

Where I’d Put $15,000 in Top Energy Stocks for Income and Appreciation

The recent pullback in energy stocks presents a compelling opportunity for long-term investors to generate capital gains and dividend income.

Read more »