Canadian Utilities Giant is Looking Attractive at These Levels

Fortis Inc. (TSX:FTS) shares have climbed 24% since Capital Ideas wrote about the company 15 months ago

Capital Ideas Media | June 24, 2022 | SmallCapPower: Given the stock-market selloff recently, investors might want to become more defensive in their thinking.

(Originally published on Capital Ideas Media on March 9, 2021)

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One Canadian large-cap name we like at this time that fits the bill is Fortis Inc. (TSX:FTS). Fortis shares are down year to date and are off more than 10% over the past 52 weeks, but that has pushed its dividend yield north of 4% [now 3.6%] for the first time in almost a year.

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[Editor’s Note: Shares of Fortis have gained about 24% since Capital Ideas wrote about the company 15 months ago.]

As a regulated utility, the Company’s cash flow is among the most predictable of any business, which has given Fortis confidence to target 6% annual dividend growth annually through 2025.

The Company also has a payout ratio of just 74%, which gives it room to increase its dividend even more, and its stock is currently trading at a price-to-book ratio of only 1.36.

As well, Fortis has a carbon emissions reduction target of 75% by 2035, which should make its shares more appealing to ESG investors, both retail and institutional.

And, Fortis has an enviable long-term track record of generating an average annual return for its shareholders of about 13% over the past 20 years.

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