So, you’re starting your investing journey. Your feed is full of chatter about stocks that moon 10% in a day and cryptic crypto talk. It’s exciting, but it’s also overwhelming and risky. What if I told you one of the smartest moves you can make is to invest in something… boring?
Not just boring, but beautifully boring. A stock that’s less like a trending TikTok sound and more like your favourite reliable playlist. That’s where Fortis Inc. (FTS), a Canadian utility giant, comes in. It was highlighted in our weekly scan for a reason, and today, we’re doing a deep dive to see if it belongs in your portfolio.
First, What Exactly Does Fortis Do?
In simple terms, Fortis keeps the lights on, the heat running, and the stoves cooking for millions of people. They are a regulated utility company. Think of them as the landlord for essential infrastructure:
- They own and operate electrical grids and natural gas distribution networks.
- Their main territories are in Canada (five provinces), the U.S., and the Caribbean.
- They serve approximately 3.4 million customers.
The key word is “regulated.” This isn’t a wild, free-market business. Governments approve the rates they charge customers, ensuring Fortis earns a stable, predictable return. This removes a huge amount of uncertainty.
Why It Showed Up on Our Radar (The "Score of 2")
In our system, a score of 2 signals a well-positioned, low-volatility stock with reliable fundamentals. For Fortis, this score is built on a few rock-solid pillars:
- Predictable Revenue: People pay their utility bills first, in almost any economic climate. Recession? Pandemic? You’ll still pay for electricity. This makes Fortis’s cash flow incredibly stable.
- A Planned Growth Engine: Fortis isn’t just sitting still. They have a detailed, 5-year $25 billion capital plan. This money is for upgrading old infrastructure, connecting new communities, and adding renewable energy. This spending is approved in advance by regulators, which translates into predictable future revenue growth.
- The Dividend Kingpin: This is the main attraction for many investors. Fortis is a Canadian Dividend Aristocrat. They have increased their dividend for 50 consecutive years—through every recession, boom, and crisis since 1973. It’s not just a promise; it’s a track record.
The Investment Thesis: Why You Might Buy FTS
Let’s translate this into what it means for you, the investor.
- For Sleep-Easy Stability: Adding FTS to your portfolio is like adding a weighted blanket. It reduces overall volatility. When tech stocks are zipping up and down, FTS tends to hold steady.
- For Growing Passive Income: That dividend isn’t static. Management plans to raise it by 4-6% annually through 2028. You get paid just for holding the stock, and that payment grows. It’s the cornerstone of a passive income strategy.
- For Long-Term Compounding: Reinvesting those steady, growing dividends over decades is a powerful wealth-building tool. It’s not sexy, but it works.
The "But Wait…" Considerations (Every Stock Has Risks)
No investment is perfect. Here’s what gives some investors pause:
- Interest Rate Sensitivity: Utilities like Fortis borrow a lot of money for their big projects. When interest rates are high (like they have been), their borrowing costs go up, which can pinch profits.
- Slow Growth, Not No Growth: Don’t expect this stock to double in a year. Its appeal is gradual, compounding growth of 5-8% per year, plus the dividend. It’s a tortoise, not a hare.
- Regulatory Risk: While regulation provides stability, a hostile regulatory decision could limit their profit growth. It’s a low probability, but it’s a constant part of the business.
The Bottom Line: Who Is FTS For?
Fortis is the ultimate foundational stock. It’s for:
- The beginner who wants to start with something understandable and low-stress.
- The investor seeking reliable dividend income to reinvest or live on.
- Anyone who wants to balance out riskier picks in their portfolio.
Actionable Takeaway:
If your goal is to build a resilient, long-term portfolio, FTS is a prime candidate for a core position. You don’t need to watch it daily. Buy it, set your dividends to reinvest, and check in quarterly. Its job isn’t to make headlines; its job is to quietly build wealth for you over the next 20 years.
In a world of financial noise, sometimes the most powerful move is to invest in the quiet, essential things that work every day, unseen. That’s the Fortis proposition.
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