Thursday, May 21, 2015

Fortis Inc.

I have hit a milestone today as I started to bog on May 21, 2008, some 7 years ago.

Sound bite for Twitter and StockTwits is: Dividend Growth Utility. If you hold stocks over the very long term there will be ups and downs in growth rates. Why I hold over the longer term is the growth in dividends. On my original purchase I am earnings a dividend yield of 29%. See my spreadsheet at fts.htm.

I own this stock of Fortis Inc. (TSX-FTS, OTC-FRTSF). It was on Mike's site showing Dividend Paying Canadian Growth stocks. I bought this stock as Newfoundland Light and Power Co. Ltd. Class A shares in 1987. I bought more in 1995 and 1998. In 2005 I sold some Fortis from my RRSP account as I needed to get $20,000 in this account and I was concerned about the debt liquidity of this stock. However, this stock continues to be one of my big stock holdings.

This stock has moderate dividends and moderate dividend growth. The current dividend is 3.5% and the 5 year median dividend yield is 3.3%. The dividends have grown at 4.24% and 9% per year over the past 5 and 10 years. The 10 year growth is higher than usual because dividend growth was fast between 2005 and 2008. This probably will not happen again.

The Dividend Payout Ratio for EPS is a bit high in 2014 at 91%, but it is expected to moderate this year. The DPR for CFPS was higher this year than normal at 32%, but it is also expected to go lower to around 26% for this year. The 5 year median DPRs for EPS is 72% and for CFPS is 27%.

I have had this stock for just over 27 years. The total return is 13.9% per year with 8.19% per year from capital gains and 4.90% per year from dividends. My stock cost is $6.81per year and I have received $18.43 per share in dividends.

The 5 and 10 year total return to the end of 2014 was 10.03% and 12.35% per year. The dividend portion of this return was 3.71% and 3.94% per year, respectively. The capital gains portion of this return was 6.32% and 8.41% per year, respectively. The total return to date over the past 5 and 10 years is lower at 6.20% and 8.38% per year.

The outstanding shares have increased by 10% and 11% per year over the past 5 and 10 years. The shares have increased due to Share Issues, Stock options, DRIPs, Employee Participation Plan and Debenture Conversions. For me as a shareholder, I am interested in per share values to determine how well this company is growing.

Revenue growth is good, but Revenue per Share growth is non-existent to moderate. Earnings growth is moderate to good but EPS growth is non-existent to moderate. Cash Flow growth is good, but CFPS growth is low to moderate.

Revenue has growth at 8.2% and 16.8% per year over the past 5 and 10 years. Revenue per Share is down by 1.6% and up by 5% per year over the past 5 and 10 years. Revenue is expected to grow well in 2015.

Net Income is up 3.9% and 13.31% per year over the past 5 and 10 years. EPS is down by 1.5% and up by 3.3% per year over the past 5 and 10 years. EPS is expected to grow in 2015 by 46%, but it is only up by 3.5% in the first quarter.

Cash Flow is up by 10.3% and 17.3% per year over the past 5 and 10 years. CFPS is up by 0.2% and 5.5% per year over the past 5 and 10 years. Analysts seem to expect good growth in CFPS for 2015.

The Return on Equity has consistently been moderate on this stock. The ROE for 2014 was 4.6% and the 5 year median is 7%. The ROE on Comprehensive Income was a bit better in 2014 at 5.7% but it has a 5 year median of just 5.9%.

The Liquidity Ratio for 2014 was 0.73. If you add in cash flow after dividends it is 0.97. If you add in the current portion of the long term debt and cash flow after dividends it is 1.19. This is a low number but adequate. The Debt Ratio is good in 2014 at 1.53. Leverage and Debt/Equity Ratios are a little high but acceptable at 2.92 and 1.92.

This is the first of two parts. The second part will be posted on Friday, May 22, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Fortis is a diversified, international distribution utility holding company. Its regulated holdings include electric distribution utilities in five Canadian provinces and three Caribbean countries and a natural gas utility in British Columbia. Fortis owns and operates non-regulated generation assets across Canada and in Belize and Upper New York State. It also owns hotels and commercial office and retail space primarily in Atlantic Canada. Its web site is here Fortis.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.


  1. Congrats on the milestone. You run the most useful investment blog for Canadian stocks. Thanks for sharing all the analyses.

  2. congratulations - love your blog!

  3. Congratulations! Your blog and accompanying spread sheets are my go-to sources for information. Thanks, Susan, and many more years of happy blogging!

  4. Thanks guys. I am glad you enjoy my blog.


  5. Congratulations Susan. I find your analysis of the Canadian dividend space very helpful and I look forward to reading more in the future.