The Dividend Knight Canadians Shouldn’t Ignore Right Now
The TSX has me worried. I know, when we look at recent performance, one might wonder why on earth that might be. After all, it has recently hit all-time highs! Yet that’s exactly why I’m worried. At these heights, investors start to get antsy and want to take their earnings. And in an economy that’s still under the pressure of high inflation and interest rates, that’s exactly what tends to happen.
That’s why today I’d recommend investors consider a Dividend Knight. It can be easy to ignore these companies, given that they tend to be incredibly boring. But I like boring, and you should too. And one of the most beautifully boring stocks out there right now? That’s Fortis (TSX:FTS).
Why FTS
Fortis is a regulated utility stretched across North America and into the Caribbean. It recently reported its second-quarter earnings, proving why it has demonstrated robust growth not just this quarter, but for years.
Fortis’ forward-looking capital investments, regulatory achievements, and sustainability commitments all lean into why this is a strong long-term investment. During earnings, Fortis reported net earnings of $384 million or $0.76 per share. This was a major increase from the $331 million or $0.67 reported at the same time last year. The growth was helped by rate base expansion, with significant projects like the Eagle Mountain Pipeline and revenue adjustments at Central Hudson.
With capital expenditure hitting $2.9 billion in the first half of 2025, Fortis stock is now on track with a planned $5.2 billion in capex for the year. The dividend stock also advanced an agreement to serve a new data centre in Tucson Electric Power. All in all, the company proved it’s not standing still.
More to come
This leads investors to a strong Dividend Knight with more in the making. The company’s strategic investments in infrastreucture and energy efficiency projects already support consistent growth. It all feeds into its $26 billion five-year capital plan to boost its rate base from $39 billion as of 2024 to $53 billion by 2029. That’s a compound annual growth rate (CAGR) of 6.5%!
And yet, even with all this stable growth, even with a 3.6% dividend yield, even with an increase in the dividend every year for over 50 years, the company remains cheap. The dividend stock trades at 20.1 times earnings, showing reasonable valuation for a long-term stock.
In fact, the company continues to stress that it will keep growing dividends by 4% to 6% between now and 2029. And with a payout ratio of 71% at writing, that shows the company certainly has the capacity to keep growing the business while supporting dividend growth. In fact, even an investment of $7,000 today would bring in annual income of $255.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| FTS | $67.45 | 104 | $2.46 | $255.84 | Quarterly | $7,014.80 |
Bottom line
If you’re an investor worried about the future and a stock dip, then Fortis stock is where you need to be. This is a stellar investment for those wanting some income on the side and growth long term. And yet it continues to be an overlooked Dividend Knight on the TSX today. So don’t follow the crowd, don’t believe boring isn’t beautiful, because in the world of investing, that’s exactly what you want.
