In the constantly changing world of dividend investing, choosing equities that provide dividend growth and security is critical. Fortis (TSX:FTS) remains one of my top picks in the world of dividend stocks, and I think it’s worth considering right now.
There are a myriad of reasons why this is the case. Let’s dive into what makes this a strong option for investors looking for consistent capital growth and dependable dividend income in March 2025.
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Strong financial backbone
For a utility giant like Fortis, investors will likely spend a lot more time assessing the company’s balance sheet, at least relative to other stocks in the market.
Looking at Fortis’s cash flow generation potential, it’s clear that this prominent player in North America’s regulated gas and electric utility industry is among the most stable and is worth considering. The business caters to many clients and operates in 10 U.S. states, three Caribbean nations, and five Canadian provinces. As of September 30, 2024, Fortis reported $12 billion in revenue and $70 billion in total assets.
From a financial perspective, Fortis provides solid results for its 2024 fiscal year. The company’s reported net results attributable to common shareholders were $1.6 billion, or $3.24 per share. This represents a rise from 2023’s $1.5 billion, or $3.10 per common share. The main drivers of this development were the rate base increase throughout its utilities and the introduction of new customer rates at Tucson Electric Power (TEP) on September 1, 2023, and Central Hudson on July 1, 2024.
Strong growth prospects
With the announcement of a $26 billion capital plan for 2025-2029, Fortis has once again highlighted its dedication to infrastructure development and future expansion. With a predicted average annual rate base growth of 6.5% through 2029, this plan is a $1 billion increase over the previous five-year plan. Transmission investments at ITC and customer development in Alberta are significant factors contributing to this increase. Notably, ITC projects that MISO’s Long-Range Transmission Plan (LRTP) Tranche 2.1 will have assets worth at least US$3 billion, most of which are anticipated to be acquired after 2029.
Dividend reliability and growth
Fortis’s dividend history demonstrates its commitment to providing value to shareholders. The company announced a 4.2% rise in its common share dividend in the fourth quarter of 2024, marking the 51st consecutive year of dividend increases. This is evidence of its steady business model and reliable execution. The company’s strong capital plan and growth strategy align with the extended 4-6% annual dividend-growth target through 2029.
The verdict
Fortis has consistent financial performance, strategic capital investments, and an unwavering commitment to dividend growth. In my view, this is a utility giant that provides the sort of stability and long-term capital appreciation upside most investors with a time horizon longer than five years will want to consider.
For these reasons and others, Fortis is my top dividend pick in this market right now.
