For some investors, keeping track of earnings reports and market headlines while adjusting a portfolio can feel like another job. Fortunately, for those investors who already have enough to worry about and want a simpler investment path, there’s one Canadian dividend stock that can help.
That’s where Fortis (TSX: FTS) comes in. The utility stock offers a straightforward reason to hold it for years, along with a dividend that continues to reward patience.
If you want to spend less time managing your investments, here’s why Fortis might make sense.
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Why this Canadian dividend stock is easier to own
Fortis is one of the largest utilities in North America. The company operates a portfolio of regulated electric and gas utilities that serve nearly 3.5 million customers across Canada, the U.S., and the Caribbean.
Fortis’ operations are primarily tied to transmission and distribution assets. In other words, the infrastructure that moves energy to the homes and businesses that need it.
That’s an important and often-dismissed point. Regardless of how the market is moving, customers still need electricity and natural gas. And while households can cut back on discretionary spending or switch to a cheaper cell phone plan, they still need to keep the lights on.
This creates a massive defensive moat for Fortis, but that’s only the start.
The regulated nature of Fortis’ business adds a layer of predictability to its earnings. That’s because regulators set the rates that utilities can charge. This means Fortis can better forecast how much it can invest in growth, and how much it can pay out as a top Canadian dividend stock.
For someone who dislikes managing investments or wants to spend less time doing that work, this makes Fortis appealing.
And it’s not even the best part.
A dividend that can grow while you get on with life
One of the main reasons investors flock to Fortis is for its dividend. As one of the best Canadian dividend stocks, Fortis offers a stable payout that continues to grow each year.
As of the time of writing, Fortis offers a 3.4% dividend yield. That works out to $2.56 per share each year. It’s not the highest yield on the market, but it is well-covered and continues to grow.
In fact, Fortis has increased its dividend for 52 consecutive years, a record that spans several very different economic environments. It’s also the second longest dividend increase streak in Canada.
For a low-maintenance investor, that stability and growth are huge. Given a $25,000 position in Fortis, that works out to a little over $850 per year. That’s not enough to retire on, but it is enough to provide investors with nearly a dozen new shares each year in reinvestments.
Beyond the dividend, Fortis continues to grow. The company has a $28.8 billion capital plan that extends through the end of the decade. Those investments are expected to expand its regulated asset base and support annual dividend increases through 2030.
Keeping ownership simple over the long term
No stock, even a defensive one like Fortis, is without risk. Fortunately, Fortis offers a mix of defensive appeal, long-term growth appeal, and a growing dividend.
In my opinion, Fortis should be a core holding in any long-term well-diversified portfolio.
Buy it, hold it, and watch it (and your income) grow.
