Fortis Inc. (FTS.TO)

She's buying here. You always want to allocate some part of your portfolio to a defensive stock like this. Not the highest yield, but attractive, under 4%; increases it annually by about 5%. Longer term, has outperformed TSX. Holding for any AI play is way down the road.

It is the second largest diversified utility in Canada and is better than other utilities. Since it is a bit cheaper it is OK to buy now. She likes the diversification.

Transmission and distribution of electricity. About 99% of cashflows are regulated, which makes it steady-eddy, boring, and that's why he likes it. Over 50 years of dividend increases. Regionally diversified. Solid dividend. 

Utility names have all gone down aggressively, it's the interest-rate sensitivity of it all. One of his go-to names. All are very undervalued, but strong dividend yields, so attractive for people looking for income. 

Likes the global growth profile of BIP.UN and the NA one of FTS.

Unfortunately, these stocks aren't working yet; they're later-stage stocks in terms of AI and EVs, which will demand a lot more power that clean energy can supply. It's a little early for names like FTS, but they will benefit. Interest rates remain high which hurts these stocks. So, be patient and collect the 4.5% dividend which they have grown the past 5 years.

ZWU's covered call will pay a higher dividend, though FTS' is solid and growing. ZWU pays more income because you're selling calls. The downside is that as interest rates decline, utilities will improve and you will lose that upside if you hold ZWU and not a plain ETF or Fortis itself. If you are positive utilities, don't use a covered call ETF.

Core holding. Should benefit if rates start coming down. Electricity and gas distribution and transmission, not generation. As we consume more electricity via EVs and power to data centres, will benefit utilities. Cashflows are regulated, visible, highly defensible. Yield of 4.4%, increased regularly with plans to continue in 4-6% range out to 2028.

Has raised its dividend for 50-straight years. A steady, consistent dividend-grower that they plan to grow 4-6% annually through 2028. That's an 8-10% total return. FTS hasn't done much in recent years given interest rates rising, but when they fall, FTS will benefit.

Editor's Note: The question was on utilities and her response included Fortis and Emera. Utilities are lower volatility in the long term and come with a nice yield. There is more growth ahead that we haven't seen for the past 5 to 10 years. Rising rates give a better ROE. She likes Fortis and Emera with Emera showing a little more growth and a yield of 6%.

ENB has lots of debt, which the company has indicated it's going to reduce, which means slower dividend growth over time. Yield is 7.6%.

FTS is less levered. For a pure income play, he'd choose this one over ENB.

His favourite play in the entire sector is TRP. Less levered than ENB. Healthy dividend yield, with more room for growth. More room for growth in general. 

Pays a 4.1% yield. They've increased that dividend the past 50 years, which is key. They recently announced their forecast of rate growth of 5-6% for the next 5 years, and dividend growth of 4-6%. A slow, steady grower. Was hit last year by rising rates, but should benefit from declining rates this year.

5 decades of straight dividend increases every year. You won't find a more sustainable dividend. Yield of 4.2% is lower, so not a ton of income, but sustainable and growing. Core position for him. Hopes it'll be around forever; it gets dark every night, people need to turn the lights on. High payout ratio, but not uncommon for utilities, and payout ratio on cashflow is very conservative.

He likes to buy below $50. But sometimes you just have to hold your nose and buy it. For new clients, he buys half, waits 6-12 months for a dip. If none appears, he goes ahead and buys the rest, because you want to at least get on the train for those dividends, rather than waiting forever for the right price and it never comes around.

They've done very well in the U.S. Have been great acquirers which should continue, as should dividend increases.

Performance of utility style stocks has been under pressure from rising interest rates. Expecting better performance going forward. Increased demand for electricity will be good for business. Dividend is safe. Good for long term investors. 

FTS is a stable utility company, with a good market cap of $27B, a decent forward P/E of 17.2X, and a strong yield of 4.3%. Most utility stocks sold off over the past few months due to fears of 'higher-for-longer' and elevated interest rates, however, we believe that this presents a good buying opportunity in utility stocks as expectations for rates can change rapidly, and its yield of 4.3% can become suddenly attractive.
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