Let’s play a game, shall we? During this period of volatility, it can be interesting to look back and wonder, “What if?” So, let’s do that with Fortis (TSX:FTS), a company well known for being stable even when the market is the most volatile.
Back in 2014, you could have purchased shares at $31.50 with $1,000. That would have bought you about 31 shares. If you then sold them as of writing, that would have created returns of $668.73, giving you an investment worth $1,668.73 today.
So, could that happen again? Let’s take a look at three items to consider about Fortis stock before you get in too deep.
Strong and stable
When it comes to Fortis stock, investors love it for the strength and stability of its business. Fortis stock is considered a defensive titan, as it operates in a relatively stable and essential industry of utilities. This provides protection even against economic downturns, making it an attractive option for investors.
The utility sector is regulated, providing essential services like electricity and gas no matter what’s happening in the markets. This translates into reliable and recurring revenue streams, for a solid financial foundation.
What’s more, Fortis stock is well diversified, with operations across the world. It has a track record of a consistently profitable and healthy financial profile, with low debt levels and consistently positive cash flow. All of this is perfect for those investors seeking stability.
Reliable dividends
Another reason investors like it so much is that Fortis stock recently became a Dividend King. This means it’s increased its dividend each year for the last 50 years! That’s something only one other dividend stock can claim, also in the utility sector.
The company currently offers a dividend yield at 4.43%, so it’s no slouch either. What’s more, the payout ratio remains at a very healthy 73.71% as of writing, so there is plenty of cash to support the stock. Yet that dividend is far higher than the average yield of 3.68% over the last five years. Further, Fortis stock is near 52-week lows!
This provides the potential for an opportunity for those wanting a higher dividend for a lower price. Yet, of course, there is likely to be a reason for that share drop. This is why we now have to turn our attention to earnings.
Performance
During earnings, Fortis stock reported its fiscal 2023 results. The company delivered a solid financial performance and met analyst estimates. Earnings per share came in at $5.07, with revenue up 5.3% year over year to $9.8 billion.
It seems that this wasn’t enough to send shares upward once more. There continue to be higher interest rates weighing on the stock, with a broader market selloff putting pressure as well. Some analysts are bullish for when the dust settles, given then company’s strong fundamentals and reliable dividend.
However, others are cautious, given near-term headwinds from the market environment and higher interest rates. But there’s no one saying sell. Instead, if you’re fearful, perhaps stay on the sidelines. That being said, buying at these levels could also mean you achieve the growth seen over the last decade — and quite easily.
