FORTIS INC. $34 - Toronto symbol FTS

FORTIS INC. $34 (Toronto symbol FTS;Conservative Growth Portfolio, Utilities sector;Shares outstanding: 190.7 million; Market cap: $6.5billion; Price-to-sales ratio: 1.8;D i v i d e n d y i e l d : 3 . 6 % ;TSI Network Rating: Above Average; www.fortis.ca) has raised its quarterly dividend by3.3%, to $0.31 a share from$0.30. The new annual rate of$1.24 yields 3.6%. Fortis has raised its payout every year for the past 40 years.

The company should complete its takeover of CH Energy Group (New York symbol CHG)in the first quarter of 2013. CH is a regulated utility that supplies electricity to 300,000 customers in the Mid-Hudson River Valley in New York State.

Fortis will pay $1.5 billion U.S. for CH Energy, including assuming $500 million U.S. of debt. That’s a high 23% of the company’s market cap. Large acquisitions, even of stable regulated utilities like CH Energy, can come with unpleasant surprises.

Fortis is still a hold.

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