You can count on a 6% dividend hike

Article Excerpt

FORTIS INC. $55 is buy for steady dividend income. The company (Toronto symbol FTS; Conservative & Income Portfolios, Utilities sector; Shares outstanding: 462.9 million; Market cap: $25.5 billion; Price-to-sales ratio: 3.0; Dividend yield: 3.5%; TSINetwork Rating: Average; recently sold 13.2 million common shares at $52.15 each to a group of underwriters and a U.S. institutional investor. The gross proceeds of $690 million will help the company fund its plan to invest a total of $18.3 billion between 2020 and 2024 on improving the reliability of its power plants and transmission lines in Canada and the U.S. The additional shares outstanding will cut Fortis’s projected earnings per share, from $2.60 in 2019 to $2.55 in 2020. As well, the company has cancelled the 2% discount it offered to shareholders that preferred to reinvest their dividends in additional shares. However, Fortis’s new investments will help with its plan to raise its dividend by 6% each year through 2024. The current annual rate of $1.91 a share…

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