Is it Too Late to Buy Fortis Stock?

Is it too late to buy Fortis (TSX:FTS)? Here’s a look at whether you should buy this utility behemoth right now (or ever).

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Finding the perfect mix of stocks for your portfolio can help weather market volatility. It can also help set your portfolio up for long-term growth if you choose the right stocks to buy. After the crazy year we’ve experienced, it begs the question of whether it’s too late to buy some of those great stocks.

One such example is Fortis (TSX:FTS). Here’s a look at whether it’s too late to buy Fortis right now.

A case for Fortis

For those unfamiliar with the stock, Fortis is one of the largest utilities in North America. The company boasts a sprawling portfolio that comprises 10 operation regions across the Caribbean, the U.S., and Canada.

More importantly, Fortis offers investors one of the most lucrative business models on the market. In short, Fortis generates a stable and recurring revenue stream that is backed by long-term, regulated contracts.

Those contracts often span decades in duration, resulting in a predictable revenue stream that allows Fortis to invest in growth and pay a handsome dividend.

That dividend is one of the most reliable payouts on the market. As of the time of writing, that yield works out to a handsome 4.40%. This means that investors who drop $40,000 into Fortis as part of a well-diversified portfolio can expect to generate income of $1,760.

Even better, that’s just the expected first-year income. Fortis has provided investors with a healthy annual bump to that dividend for an incredible 50 consecutive years. This makes Fortis one of only two Dividend Kings on the market.

This fact alone makes Fortis a compelling option for long-term investors who want reliable income in buy-and-forget packaging.

Turning to the stock price, we see a different picture emerging. As of the time of writing, Fortis trades above its 52-week low, but it is down over the trailing two-year period by 11%.

Given the continued market volatility and the opportunities available elsewhere on the market, does it mean that it’s too late to buy Fortis?

Is it too late to buy Fortis?

On one hand, the current discount on Fortis stock can be viewed as an opportunity to pick up a stellar long-term option at a great price. The defensive appeal of Fortis, particularly over the longer term, makes this a compelling buy irrespective of recent volatility.

On the other hand, the weakness of the stock price over the past few years makes other growth stocks look more appealing. This may be the better option to consider for investors with an appetite for risk and shorter timelines.

In my opinion, the stability of Fortis’s dividend, along with what is arguably the most defensive moat on the market is too hard to ignore. In short, Fortis is a must-have investment for any well-diversified portfolio.

Is it too late to buy Fortis stock? Absolutely not. Prospective investors should look at buying Fortis today at a discount. This allows them to start collecting that stable dividend and, more importantly, forgetting about it for a decade or more.

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 Demetris Afxentiou has positions in Fortis. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.

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