Friday, July 25, 2008

Fortis Inc

I bought this company in 1987 (TSX-FTS) and make additional purchases in 1995 and 1998. According to Quicken, I have made some 13.8% average annual returns on this stock. This return, of course, includes dividends. I have made a return of 16.5% over the last 5 years. The spreadsheet gives a 5 year return of 20.6% as the spreadsheet goes to 2007 and my figures are more current. According to my spreadsheet, this stock has increased its dividend over the last 10 years by 6.4% per year and over the last 5 years at 10.8% per year.

Revenues on this stock have been increasing much quicker than the Earnings per Share (EPS). Revenues have increased over the last 5 years at 30.6% per year, but the EPS has only increased by 6.3%. However, if you look at the revenue per share, it has only increased by 9.7% per year over the last 5 years. This is because the company has increased its revenue by buying other companies. Their most recent purchase was of Teresen in 2007. For this stock, the book value has increased by 14% a year over the last 5 years and the accrual ratio at the end of 2007 is a low 1.7%.

Now I will turn to the negative stuff. The debt load is quite high, with a current Asset/Liability of .59 and the Asset/Liability of 1.39. However, please note that the debt load has always been quite high on this stock. The Operational Cash Flow increase over the last 5 years is low at 3.5% and the Operational Profit Margin has decreased in 2007 to 13.7% compared to a 10 year average of 18%.

Overall, this has been a great company for me. It has been a very steady earner with nice increasing dividends. This stock has done slightly better than the TSX over the last 5 years, but slightly under the TSX over the past year. Note that the charts do not include dividends, which are quite good and add another 3.5% earnings on average over the last 5 years.

This company provides gas and electricity to customers across Canada, through regulated holdings that include a natural gas utility in British Columbia, and electric utilities in 5 provinces in Canada, and 3 Caribbean countries. It owns non-regulated hydroelectric generation assets across Canada and in Belize and upper New York State. It also owns and operates hotels in eight Canadian provinces as well as commercial real estate in Atlantic Canada. It had recently bought Teresen, a BC gas utility. Its web site is See my spreadsheet on this company at

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at for a list of the stocks for which I have put up spreadsheets on web site.

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