Is your portfolio diversified? Finding the right mix of investments can not only offset the impact of market volatility, but also provide a generous source of income. One of the great investments to consider is this Canadian utility stock for any portfolio.
In case you’re wondering, is the Canadian utility stock in question Fortis (TSX:FTS), and this is why it should be on the radar of investors everywhere.
Meet Fortis
Fortis is a utility company. In fact, it is one of the largest utilities on the continent. The company has a presence not only at home in Canada, but also through operations in the US and the Caribbean.
That diversified presence is one of just a handful of reasons why this is the Canadian utility stock for investors.
Utilities like Fortis generate a reliable and recurring revenue stream. The reason for this can be traced back to Fortis’s business model.
In short, Fortis provides utilities. That service is a necessity that consumers cannot exchange or no longer use. This service is also tied to long-term regulated contracts, which guarantee Fortis a stable and recurring income stream.
In other words, as long as Fortis continues to provide utilities, it will generate a juicy, reliable revenue stream.
Thanks to this income, Fortis can invest in growth and pay out a nice dividend (more about that later).
Utilities like Fortis are not typically known for growth. In fact, utilities are often portrayed as historic giants that pay dividends with little to no incentive or income to invest in growth.
Fortunately, when it comes to Fortis, that couldn’t be further from the truth.
Fortis has broken that stereotype by taking an aggressive stance on expansion. In recent years, the company has focused on improving its existing facilities and transitioning to renewable energy sources.
Fortis has set aside a capital plan of as much as $26 billion over the coming years to finance these improvements. That includes an annual average growth of 6.5% through 2029.
The plan also includes an annual dividend increase of 4 to 6% in the coming years.
Let’s talk about that dividend
One of the main reasons why Fortis excels in any portfolio is its great dividend. At the time of writing, the company offers a respectable quarterly dividend with a yield of 3.4%.
For those looking to invest and not yet benefit from that income, an $8,000 investment will generate enough income to buy a few shares from reinvestments alone. In other words, Fortis is not just another Canadian utility, but also a great buy-and-forget option.
And that’s not even the best part.
Fortis is one of only two companies in Canada to have offered investors 50 consecutive years of annual increases in that dividend. This adds to the buy-and-forget argument.
Fortis: the Canadian utility your portfolio needs
Every stock carries risks, and market volatility can be seen everywhere. Therefore, the importance of diversifying your portfolio with stocks like Fortis cannot be overstated.
In my opinion, Fortis is a must-own Canadian utility that should be a core holding in any well-diversified portfolio.
Buy it, hold it and watch your future income grow.
#Canadian #utility #stock #sleep #night