FTS:CC - Don't Wait Now's the Time to Load Up on This Canadian Utilities Giant
2024-06-27 20:00:00 ET
Investing in utility stocks promises to deliver greater returns than investments in other sectors. As a Canadian investor, you can seek ways to invest in utility giants to double your returns and grow your capital for the future. Indeed, one such utility giant to invest in on the TSX is Fortis ( TSX:FTS ), a Canadian utility company that delivers higher dividends to stockholders each and every year.
Here’s more on why I think Fortis remains among the top dividend stocks to invest in right now.
The lowdown on Fortis
With more than 10 core utility transmission and distribution assets in Canada and the U.S., Fortis serves more than 3.4 million customers in the region, with additional revenue derived from the company’s operations in the Caribbean.
From a diversification standpoint, Fortis has done well to provide investors with multiple revenue streams. The company has a core regulated utilities business but is also focusing on expanding its focus to other non-core areas, with a growing natural gas, renewables, and non-regulated business worth considering.
With more than $477 million in net income in the first quarter alone, Fortis’ 4.4% dividend yield looks well covered. This utilities giant should continue to benefit from longer-term electrification trends and regional strength in its core markets.
A conservative business model
Many utilities companies go all-in on one specific business segment. However, Fortis’ diversification geographically and across business lines provides some added stability for investors worried about a burdened consumer.
Additionally, it’s worth pointing out that, typically, cash flows for utilities companies are very stable due to the nature of the product sold. Whether it’s electricity or natural gas, folks need to power their homes. This is a company providing an essential service. So, when the market is up or down, it won’t really matter in the sense that customers are likely to pay their bills on time. That’s the kind of economically insensitive stock investors may want to seek. That goes double for those concerned about a recession around the corner.
Bottom line
Overall, I think the utilities sector is one that’s positioned for continued upside from here. Yes, Fortis and its utilities peers have seen a nice run of late. There’s something to this rally, and the secular catalysts supporting Fortis are likely to remain in place for a long time.
However, at just 17 times earnings, I don’t think investors are paying up for this defensive exposure right now. Compared to most higher-growth areas of the market that are likely to provide long-term total returns in line with Fortis, investors can gain relative stability at a discount. I think that’s invaluable, considering we have no idea what’s ahead.
The post Don’t Wait, Now’s the Time to Load Up on This Canadian Utilities Giant appeared first on The Motley Fool Canada .
Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy .
2024