A Safer Dividend Stock to Buy With $20,000 Right Now

Fortis stock is one of the best and safest dividend stocks, with a 51-year record of increases and a current yield of 3.96%.

Karen Thomas, MSc, CFA

Karen is a stock market enthusiast focused on uncovering those stocks that she believes the market has mispriced. She does this through fundamental and quantitative analysis of companies and their industries, as well as a study of future opportunities and trends. She holds a Masters degree in Finance, the CFA designation, and has over 20 years of experience in the investment management industry. Having worked at a major pension fund, as well as two leading mutual fund firms as an analyst and portfolio manager, she has solid investing expertise which she aims to share with her readers.

Published February 20, 2025 9:30 pm EST

| More on: FTS

Are you looking for safe dividend income? Do you want to know you have an income stream you can rely on to always be there and to grow? Well, look no further because I have a safe dividend stock to buy that will provide you with all that and more.

Fortis (TSX:FTS) is an ultra-defensive and safe utility stock that has many reasons to buy it right now.

Man holds Canadian dollars in differing amounts — Source: Getty Images

This safe dividend stock has a 51-year dividend history

The defining characteristic of a utility company is that it’s safe and predictable. This comes from the fact that utility company revenue is regulated. But it also comes from the fact that utilities are an essential, a necessity. We can cut back spending on many things, but utilities are not one of them. Regardless of the economic situation, we need electricity to stay warm, eat, and enable our everyday living.

As far as safe utility stocks go, Fortis is first class. It has a 51-year history of not only paying a dividend but also growing it each and every year. Looking ahead, Fortis is forecasting a 4-6% annual dividend growth rate to the year 2029.

So, if you have $10,000, I would recommend buying Fortis for its safe and reliable dividend. The stock is currently trading at $62.17 and is yielding 3.96%. This means you would be able to buy 320 shares, which would give you $787 in annual dividend income. It might not sound like a lot, but these amounts really do add up over time. So, start early and invest regularly to see this grow over time.

Growth is coming to this dividend stock

It’s a new world today. With artificial intelligence and the electrification of energy sources, Fortis is in a bright spot. This will enable the company to continue to grow at a healthy clip and, of course, to continue to increase its dividend.

At this time, Fortis is seeing significant service requests for data centres that will support the growing artificial intelligence industry. Should these come to fruition, it would result in energy demand that would make current growth projections for Fortis way too modest. So, there’s a lot of upside to estimates.

Also, Fortis’s capital spending plan is $5.2 billion for 2024 and $26 billion for the 2025 to 2029 time period. This plan is driven by investments related to the resiliency of the network and growth at Fortis Alberta. It’s also related to the company’s long-range transmission plan, which aims to ensure the transmission system is reliable, economical, and compliant for the next 20 years.

These investments are low risk and highly executable, with nearly all being related to regulated growth and only 23% of them on major projects.

The bottom line

Investing in Fortis stock for dividend income is an attractive option. With Fortis, we get safety, but we also get exposure to the growth that is underway related to data centres and the electrification of the power system. Finally, this dividend stock can be expected to continue its long history of dividend increases for many years to come.