Fortis Inc. (FTS.TO)

Young investors don't care as much about dividend stocks, but they're really important. It's like collecting rent, instead of making money only once you sell a stock. The earlier they start, the more they reap the benefit of the compounding effect that takes place after 10, 20, 30 years of investing. Compounding is such a powerful tool.

It's hard to pick just one, as she likes a diversified portfolio. This name would be her second choice, after CNQ, because it's a little expensive right now. Stable utility growing 5-7% a year. Try to get it at a better price. Longest track record in Canada of dividend increases. Diversified jurisdictions. Increase in power demand is growing exponentially. Gives you exposure to AI but in a safer way, by owning the companies that produce the power.

Good long-term hold for income. Regulated natural gas and electric utility. Over 1/2 of revenues come from the US. Diversified. Very defensible and visible cashflow stream because it's regulated. Increased dividend for 51 consecutive years. In regions where data centres are being built. Yield is 3.81%.

Today, this would be a hold. Currently above his buy price, wait for a pullback for new $$. People ran toward defensive names recently. Yield is 3.8%.

Great company. Has raised dividend forever, but dividend growth is slow at only 3-4% a year. Fine for the dividend. But for dividend and growth he'd lean toward a large-cap resource producer generating tons of cash, which would give much better inflation protection. Or go with a bank (such as JPM or a Canadian bank).

She likes this name, mainly because of its geographic diversification. Also has more US utilities than peers, growing just a little bit faster.

Everybody's been crowding into what's been working. Bond proxy, not too challenged by Trump tariffs. Great long-term compounder. Raises dividend every year, by ~5%. Good long-term growth. Q4 beat. Steady player, without all the ups and downs.

One knock is that it's only growing 5%, but trading at 17x. So, no, don't buy at this level. In the space it's time to look at AQN again (believe it or not), GEI, or ALA.

Analysts tend to be conservative. It is a pretty solid, high-paying job, and they do not get much benefit from 'sticking their neck out' versus the crowd. Target prices and recommendations tend to be similar. They do not get fired if 'everyone else was also wrong' but if they are an outlier then their calls are more closely scrutinized. AT 19X earnings FTS still looks OK to us, and its positive momentum in a bad market we think is a strong sign as well. But, it is up 28% in a year, and we would not expect those types of returns on a regular basis. It is still a relatively slow-growth utility company. 
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Consistent and reliable. A quality utility, which are generally safe and slow.

EMA is his choice. Bumps along the road, but the price has appreciated. Rates coming down have helped EMA's profit. Over time, expectation is that EMA will be the better choice over FTS. 

It has strong resistance at $63 and is pulling back. It has a floor of $58 and could bounce there. Stronger support is at $55, but if it breaks that, it could fall to the next support at $42.

One of his go-to names in the space.

Is tied to interest rates. Long rates have rebounded lately. A very well-managed company with 51 straight years of raising their dividend. It will remain a core position.

Benefits from recent interest rate cuts, but note that long-term rates are actually rising and this will limit dividend stocks like this. Why? Concerns of inflation returning, or signs of a strong economy coming, but also there could be a debt-maturing wall coming. There's $300 trillion of debt around the world. Fortis pays a 4% dividend, but doesn't grow much. So, considering interest rates ahead, he may exit this at the end of 2025.

It is true that lower rates should otherwise be a tailwind for businesses with leveraged balance sheets. In fact, FTS has recovered meaningfully to reach 52-week highs recently. We think for a conservative name like FTS its performance is quite good. The upside potential from the interest rate tailwinds may not be as attractive as it used to be, but we think FTS is still a high-quality dividend payer. We think FTS can do well from here for shareholders with a potential total return of around 10% annualized return over the long-term. 
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