When it comes to dividend stocks, their reliability is of utmost importance. After all, we want to know how much income to expect so that we can plan accordingly. Irregular and unreliable income is not the type of income we want.
Thankfully, we have dividend champions that can provide us with income that’s predictable, reliable, and growing. Fortis Inc. (TSX:FTS) is a prime example of this. Let’s take a closer look.
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A 51-year dividend history
There’s nothing more telling than Fortis’ dividend history. This history includes 51 consecutive years of increasing dividend payments, making Fortis a true Dividend King (companies that have increased dividends for 50 consecutive years). This has been made possible by the fact that Fortis’ business is in the defensive utilities industry, which is characterized by two main attractive features – defensiveness and predictability.
Electricity is a need. Demand for it will not wane with economic cycles or difficult times. We simply find the money to sustain it. This provides Fortis with steady and stable demand, which translates into a stable business. Furthermore, Fortis’ business is a regulated one. This also contributes to making Fortis’ business a stable and predictable one. All very attractive features of a dividend stock.
In the last 20 years, Fortis’ annual dividend has increased more than 280% to $2.64 per share. This translates into a compound annual growth rate (CAGR) of 7%. That’s a 7% increase in Fortis’ dividend every year for the last 20 years.
Looking ahead, Fortis is forecasting a 4% to 6% annual dividend growth rate to the year 2029.
Fortis’ latest results
In 2024, Fortis’ results came in ahead of expectations, as did its first quarter of 2025. In fact, Q1 adjusted earnings per share (EPS) came in at $1.00 versus expectations that were calling for EPS of $0.97. This was 7.5% higher than last year and it was driven primarily by rate base growth across Fortis’ utilities.
Looking ahead, Fortis’ five-year capital spending plan of $26 billion will increase the company’s rate base from $39 billion in 2024 to $53 billion in 2029. Importantly, this capital investment plan is low-risk and easily achievable. In fact, nearly all of the spending is related to regulated growth and only 23% of it is on major projects.
These low-risk investments are related to the resiliency of the network and growth at Fortis Alberta. They’re also related to the company’s long-range transmission plan, which aims to ensure its transmission system is reliable, economic, and compliant for the next 20 years.
Fortis stock: A reliable dividend payer
Fortis’ stable and low-risk operations are not only reflected in its dividend history. They are also reflected in Fortis’ stock price performance over the long term. As you can see from the price graph below, the stock has been a steady performer – up 140% in the last 20 years.
This, coupled with the company’s consistent and growing dividend payments, has made for a really attractive total return profile.
I expect this to continue in the future as Fortis continues to benefit from population growth, system improvements, and increased demand from the likes of data centres and the electrification trend.
