Are you looking for quality dividend stocks to add to your portfolio?
If so, it helps to focus on stocks with great dividend growth track records.
Studies show that such stocks have performed well – even outperformed the S&P 500 over some very long timeframes!
While the temptation with dividend investing is to chase stocks that have enormous dividend yields, the fact is that a consistent dividend growth track record is a better predictor of total returns.
With that established, here’s a stock that has been quietly but constantly raising its dividend over a period of 52 years.
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Fortis
Fortis Inc (TSX: FTS) is a Newfoundland-based utility company that has increased its dividend for 52 consecutive years. The most recent of those increases occurred this year, bringing the stock’s annual payout to $2.56 and its dividend yield to 3.1%.
Now, 3.1% is not the type of dividend yield that normally gets a yield-hungry investor salivating. But note the increase in the payout over time. The dividend growth streak has been 52 consecutive years, and the annualized growth rate over the last four years has been about 5%. If past trends continue into the future, those buying FTS today will someday enjoy a much higher yield than that now being paid out.
Fortis Inc: Future prospects
Fortis, like many regulated utilities, has a very stable source of revenue. The company provides heat, light and power: people don’t usually cut these services out voluntarily, not even in recessions. So there is some stability on the revenue front just from that alone.
On top of that, historically, Fortis has invested significantly in growth. In the 1980s and 1990s, the company bought up utilities all across Canada, the U.S., and the Caribbean. These investments proved profitable and increased Fortis’ earnings.
Today, Fortis is undergoing a $26 billion capital expenditure (CAPEX) program. Though $26 billion is certainly a lot of money to be spending, Fortis says that the infrastructure upgrades being done will increase the company’s rate base by 6% compounded annually (CAGR) over five years (so, 33% by the end of the program). This indicates that, provided the company is being prudent with its financing, Fortis’ earnings will grow into the future.
Dividend potential
Currently, Fortis pays a dividend of $0.64 per quarter, or $2.56 per year. With today’s stock price of $81.79, that provides a dividend yield of 3.1%. So if you invest in Fortis and the dividend does not change, you’ll get $3,128 per year in annual passive income.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Fortis | $81.79 | 1,222 | $0.64 per quarter ($2.56 per year) | $782.08 per quarter ($3,128 per year) | Quarterly |
As you can see, Fortis has the potential to pay you up to $3,128 per year in dividend income if you invest $100,000 in it. Such a sum can now be invested into a TFSA (for those who were 18 or older in 2009 and meet a few other conditions). So, the potential to get consistent passive income from Fortis is considerable. And, best of all, Fortis continues to raise its dividend!
