Fortis (TSX:FTS) has had an impressive run in 2025, with its stock climbing more than 17% year-to-date and recently touching an all-time high of $69.70 on August 1. The broader shift in energy demand and infrastructure needs is playing a significant role in driving the market’s optimism for Fortis stock.
Notably, as demand for electricity surges, thanks in part to data centers, electric vehicles, and the broader electrification of industries like manufacturing and transportation, utility companies with strong transmission and distribution networks are likely to gain. Fortis fits that bill perfectly.
Adding to the positives is the company’s solid financial performance. Notably, this electric and gas utility company recently delivered better-than-expected quarterly earnings. FTS stock’s earnings per share of $0.76 surpassed analysts’ estimates. Further, it increased 13.4% from the year-ago quarter, driven by rate base growth, solid execution of the capital plan, and focus on improving the cost structure.
Despite the recent run, Fortis continues to offer a compelling investment case, particularly for those looking to balance growth with stability and a reliable income stream.
Fortis to benefit from higher energy demand
Supporting my bullish long-term outlook are the demand tailwinds and ongoing transition to cleaner energy. Fortis’s core strength lies in its transmission and distribution assets, which are critical components of the grid enabling increased load capacity, grid stability, and the interconnection of large-scale generation projects, including renewables.
In Arizona, for instance, Fortis’s subsidiary Tucson Electric Power (TEP) is tapping into one of the fastest-growing areas of demand – data centres. TEP has reached a key agreement with a major data centre operator to serve up to 300 megawatts of power, with operations beginning as early as 2027. The full buildout could ultimately require as much as 600 megawatts, with further discussions pointing to potential future demand of another 500 to 700 megawatts at a second site. This highlights the growing demand for power and signals long-term capital investment opportunities for Fortis.
To support growth and prepare for the energy demands of tomorrow, Fortis has outlined a $26 billion capital investment plan over the next five years. This plan focuses on modernizing infrastructure and integrating clean energy sources into its grid. The company projects that its rate base will grow to $53 billion by 2029, representing a 6.5% compound annual growth rate (CAGR). That kind of expansion supports continued earnings growth, which is a fuel for both the stock price and dividends.
Fortis – A reliable dividend stock
Besides offering steady capital gains, Fortis is also a compelling investment for income-focused investors seeking stability and consistent returns. As a leading North American utility company, Fortis operates a low-risk, regulated business model that generates highly predictable cash flows and forms the foundation for its reliable and growing dividend payouts.
Fortis has marked 51 consecutive years of dividend growth. Currently, it pays a quarterly dividend of $0.615 per share, translating into a decent yield of about 3.6%.
This blue-chip company’s ability to sustain and grow its dividend is supported by a robust capital investment plan aimed at expanding its regulated rate base. This growth strategy ensures long-term earnings stability and supports future dividend increases.
Looking ahead, management remains confident in continuing that dividend growth, targeting annual increases of 4% to 6% through 2029.
Bottom-line
In summary, while Fortis may be trading at record levels, it doesn’t look expensive when you consider its long-term potential. With rising demand for electricity, a solid capital plan, strong financials, and one of the most dependable dividends on the market, Fortis still looks like a compelling long-term investment.
