Rate base supports higher dividend

Article Excerpt

FORTIS INC. $61 is a buy. The company (Toronto symbol FTS; Income-Growth Portfolio, Utilities sector; Shares outstanding: 477.1 million; Market cap: $29.1 billion; Dividend yield 3.5%; Dividend Sustainability Rating: Highest; www.fortisinc.com) is the main supplier of electrical power in Newfoundland and PEI. Fortis also owns electrical and gas utilities across North America. The company last raised your quarterly dividend with the December 2021 payment. Investors now receive $0.535 a share, up 5.9% from $0.505. The new annual rate of $2.14 yields a solid 3.5%. Fortis now plans to spend $20.0 billion on projects and upgrades to existing operations between 2022 and 2026. Those investments should increase its rate base by 33.8%. Regulators use that metric to calculate a utility’s approved rate of return, so a rising rate base supports Fortis’s plan to lift your dividend by 6% each year through 2025. Fortis is a buy. buy…

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