The Company in a Nutshell
- FTS can continue to expand its business while increasing its dividend for several years to come.
- Management declared that it expects to increase dividends by 6% annually until 2022.
- Fortis has increased its dividend for 46 consecutive years.
- Download PDF format (Last reviewed: Dec 9th 2019)
|PRO Rating||4||Dividend Yield||3.60%|
|Dividend Safety||4||Dividend Growth Since||1973|
|DDM Valuation||17.31%||Dividend Frequency||Quarterly|
Fortis owns and operates utility transmission and distribution assets in Canada and the United States, serving more than 2.5 million electricity and gas customers. The company has smaller stakes in electricity generation and several Caribbean utilities. ITC operates electric transmission in eight U.S. states, with more than 16,000 miles of high-voltage transmission lines in operation.
|General Information||GE Data|
|Expected Earnings Date||2020-05-01|
|Next ex-dvd date||2020-05-14|
Fortis aggressively invested over the past few years resulting in strong and solid growth of its core business. You can expect FTS revenue to continue to grow as it is expanding. Strong from its Canadian base business, the company can generate sustainable cash flow leading to 4 decades of dividend payments. The company has a five-year capital investment plan of approximately $14.5 billion for the period 2018 through 2022, up $1.5 billion from the prior year’s plan. Chances are most of its acquisitions will happen south of our border. FTS yield isn’t impressive for a utility (~3.50%), but there is a price to pay for such a high-quality dividend grower.
|5-Yr Rev. Growth:||10.21%|
|5-Yr EPS Growth:||21.98%|
|5-Yr Div Growth:||7.38%|
Fortis remains a utility company. In other words, don’t expect astronomical growth from it. However, Fortis’ current investment plan is enough to make investors smile. Fortis made two acquisitions in the U.S. in order to continue its growth by opening doors to a growing market. However, it may be difficult for the company to grow to a level where economies of scale would be comparable to other U.S. utilities. The risk of paying a high price for other U.S. utilities is also present.
|Financial Debt to EBITDA (TTM)||5.2|
|Current Ratio (Quarterly)||0.62|
|Free Cash Flow (Quarterly)($B)||-0.49|
Dividend Growth Perspective
Management increased its dividend by 6.25% in 2018 and 6% in 2019 and declared that it expects to increase dividends by 6% annually until 2022. I like when companies show motivation for growth (through acquisitions) and reward shareholders at the same time. After all, Fortis is among the rare Canadian companies who can claim it has increased its dividend for 46 consecutive years.
|Payout Ratio (%)||32.58%|
|Cash Payout Ratio (%)||-43.95%|
|Enter Expected Dividend Growth Rate Years 1-10:||6.00%|
|Enter Expected Terminal Dividend Growth Rate:||5.50%|
|Calculated Intrinsic Value OUTPUT 15-Cell Matrix||Metric2||Metric3||Metric4|
|Discount Rate (Horizontal)||Discount Rate (Horizontal)||Discount Rate (Horizontal)|
|Margin of Safety||8.00%||9.00%||10.00%|
|Market Cap ($)||24B|
|Price to Book Ratio||1.41|
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- Dividend triangle chart is updated every 6 months.
- All other metrics are updated every 5 minutes (price) or weekly.
- The PDF format includes only comments (no metrics) and are reviewed every 6 months.