When investors think about the best companies to own in this current environment, a number of factors ought to come to mind. How a given company has performed in the past, its future outlook and the company’s ability to continue to grow (and return shareholder value over time) are essential to determining whether a given stock should be within a portfolio.
That goes double for today’s environment, which can be best described as volatile. With plenty of headwinds on the horizon, Canadian stocks have been hit hard as geopolitical headwinds (mostly in the form of tariffs) ravage the market.
However, there are certain companies I think really stand out from the rest. Here’s my top pick for Canadian investors looking for a rock-solid dividend stock to buy right now.
Fortis
Fortis (TSX:FTS) is a Canadian utility giant I’ve pounded the table on again and again.
This company’s focus is on providing electricity and natural gas utilities to millions of commercial and residential customers, and this business model is one that has provided extremely stable cash flows over the long term. As I’ve said in the past, until folks stop wanting to heat or power their homes and businesses, Fortis will continue to be able to raise prices (slowly but steadily over time, in accordance with regulators). Any increase in cash flows due to improved operational efficiency will be passed on to investors. That’s been proven over time.
In fact, Fortis has continued to raise its dividend each and every year for more than five decades now. This is a company with one of the best long-term dividend-growth profiles in the market. I don’t see any reason why that will change over time.
With a current dividend yield of 3.5%, and a very high likelihood that this dividend will increase over time, investors gain not only the capital appreciation upside Fortis provides (see chart above), but a dividend yield that should rise over time as distributions grow. That’s what I like to see.
Where could Fortis be headed moving forward?
I’m of the view that Fortis’s long-term trajectory should resemble what investors have seen in past decades. During good and bad times, consumers and companies will pay their utility bills. This makes utility giants like Fortis a go-to bet during recessions, so if that’s your base case, this is a good place to be.
But even in good market environments, Fortis tends to benefit from multiple expansion and other secular trends. Whether that’s the growth of energy usage tied to AI or other factors, this is a company that could certainly outperform no matter the market environment.
Personally, Fortis looks like a rock-solid bet right now I’d be willing to make.
