Between persistent tariff wars, rate uncertainty, and mixed economic signals, the Canadian investing climate can feel weird right now. Rather than being driven by a booming local economy, Canada’s persistent 3% headline inflation looks propelled by external forces, including geopolitical oil supply shocks and trade conflicts, which threaten to push inflation beyond 3.2% by the fourth quarter. A cost-push inflation environment, whereby everyday costs stay high even if consumer demand feels sluggish, complicates decisions for investors trying to build robust portfolios that remain resilient in challenging times.
In times like these, a smart TFSA and RRSP investment approach may consider holding onto the resilient portfolio anchors – TSX dividend stocks whose cash flows and payouts are so predictable that market noise simply fades into the background. Fortis (TSX: FTS) stock is one ironclad dividend payer that consistently turns market chaos into a steadily rising stream of quarterly passive income. The Canadian utility stock deserves a prime spot on your buy list going into October.
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Fortis stock: The champion with a 52-year dividend growth streak
When evaluating Canadian dividend stocks, past performance doesn’t guarantee future results — but 60 years of uninterrupted quarterly dividends, and five decades of relentless dividend raises say a lot about a TSX dividend champion’s business model. Fortis stock has established itself as the calm in the storm for dividend investors for decades now, and that label won’t fade with time but shine brighter.
Fortis, a $38.6 billion regulated electric and gas utility that traces its first public stock issuance back to 1949 when Newfoundland joined the Canadian Confederation, has paid regular dividends every year since going public in 1966, and increased its dividend payout every single year for 52 consecutive years, beginning in 1973.
FTS stock’s legendary dividend streak spans the stagflation of the 1970s, the dot-com bust, the 2008 Global Financial Crisis, and the 2020 global COVID-19 pandemic. No market storm or economic weirdness has ever rattled the dividend giant, and its investors kept receiving dividends as if the past five recessions in Canada never happened.
Should you buy FTS stock for the dividend?
Fortis appeals as a reliable, dependable and sustainable dividend stock to buy and hold in a long-term portfolio, however weird the broader economy may appear.
A new investment in Fortis stock today will earn a 3.4% yield during the first 12 months. The yield isn’t as flashy as some distressed 8% or higher payouts out there; I get that. But unlike high-yield traps that risk dividend cuts when economic trouble hits, Fortis’s well-covered payout looks set to ride any waves.
The yield could be marginally higher as management may raise quarterly dividends again in November. The utility’s current $28.8 billion five-year capital investment program may help sustain rate base growth and support a 4% to 6% annual dividend growth rate through 2030. Dividend growth may help protect your passive income stream’s purchasing power against Canadian inflation — as long as inflation rates remain below Fortis’s dividend growth rates.
And the payout appears secure.
A secure and sustainable dividend?
Could Fortis continue to pay dividends if Canadian economic risks worsen? Yes, it could. Fortis’s business operations stretch far beyond Canada into the United States and the Caribbean territories. The utility’s cash flow appears bulletproof, coming from a 99% regulated revenue base that insulates earnings and cash flow from commodity price swings and economic downturns.
Most noteworthy, Fortis maintains an adjusted payout ratio around 70% to 74% of earnings. The payout range leaves ample retained cash flow to reinvest into capital projects while comfortably supporting dividend increases.
Moreover, Fortis sits at the heart of the North American energy investment boom. It’s upgrading ageing transmission grids, connecting new power plants to an energy-intensive artificial intelligence (AI) economy, and powering new data centres and electric vehicle infrastructure over the next decade.
Investor takeaway
Trying to time volatile market turns can be a stressful game when the economy feels unpredictable. Fortis stock could be what any investment portfolio needs for defensiveness, stability, and a passive income stream that remains steady, calms nerves, and feeds income cravings, regardless of whatever happens to the North American economy.
Fortis stock is the financial calm in the middle of any storm for Canadian dividend investors seeking financial peace of mind.
