There are plenty of world-class Canadian stocks for investors to choose from. On the top of my list right now, Fortis (TSX: FTS) continues to be a table-pounder to me, despite the company’s very robust performance shown in the chart below.
Now up nearly 24% this year alone, and up much more than that over the past five years, Fortis has turned out to be one of the best total-return plays in the market. I’m going to get into the company’s dividend profile in a second, which is key to its thesis. However, there are also some strong growth catalysts worth considering with this utility giant right now.
Without further ado, let’s dive in!
Source: Getty Images
A growth profile worth buying
Unlike many of the overhyped (and largely overvalued) AI tech stocks in the market, Fortis is a unique option for investors looking to play this growth in a defensive manner.
The company’s business model is relatively simple. Take electricity and natural gas, and deliver them to the companies and households that need these essential services. Indeed, the essential nature of this business can’t be ignored, and that’s the defensive piece I mentioned above. Without paying one’s Fortis bill, there are no lights or heat.
But in the world that’s now being defined by compute capacity and the rise of data centres, that power is going to have to come from somewhere. In Fortis’s core markets, this company will be the power provider of choice for most companies looking to expand into relatively low-cost energy markets such as Canada. Over the long term, I expect this to reflect in stronger revenue and earnings growth for this company.
Don’t forget about Fortis’s dividend
A dividend yield of 3.5% may not get many investors out of bed in the morning. In that respect, Fortis doesn’t look like all that attractive an option, considering the yields of many of its peers in the utilities sector.
That said, the company’s dividend-growth profile is unmatched. Raising its dividend for an impressive 52 years in a row now, Fortis has continued to cement its commitment to providing shareholders with even more impressive returns over time.
That’s a profile I simply can’t ignore, given my penchant for passive income. For those in the same boat, Fortis’s growth and dividend profile make this a top-tier stock to buy and hold for the long term, in my view.
