Years ago a chap I admire told me his favourite retirement investment was Fortis (FTS). Fortis didn't pay the largest dividend, nor did it deliver a lot of capital gain. So, why did he rate it so highly? That's easy, because he is retired and needs an income he can trust. The Fortis dividend is dependable, if it is anything.
Fortis pays a yield of about 3.7% today. This is a little low but we are concerned here with dependability. Fortis has racked up a 51 year history of paying a dividend which, as a bonus, has increased annually, perfect for the buy and hold investor.
For further confirmation that the dividend is sustainable, check the payout ratio. This indicates how much of a company's earnings are distributed to investors as dividends. Fortis has a payout ratio of 73%. This is somewhat high but it is nowhere near worrisome. As a utility, a regulated utility boasting monopoly coverage in most of the regions it powers, Fortis has a very stable cash flow.
Another plus for Fortis is its strong management. It was ranked number one by The Globe and Mail for corporate governance in 2024.
According to Baystreet.ca., "The long-term appeal of Fortis lies in its consistent dividend growth and low-risk profile. Its regulated business model generates stable earnings, with last year’s total reaching $1.6 billion—up from $1.5 billion the year prior—and profit margins typically in the 13% to 14% range."
I follow The Stingy Investor. Fortis is a repeat investment in the very selective Stable Dividend Portfolio created by Norman Rothery. It is one of the Rothery portfolios featured by TD WebBroker in the Reports/News section at the first of every month. Click the link for an explanation.
I fully agree with Baystreet.ca when it comes to their closing paragraph:
For retirees and income-oriented investors seeking dependable returns with minimal volatility, Fortis remains a compelling long-term holding.
