Fortis Inc.

Sound bite for Twitter and StockTwits is: Price reasonable, below median. My analysis shows that the stock price is reasonable and mostly below the median. That points to a good time to buy. It is nice to buy stocks cheap, but this seldom happens for good stocks. The only test that says the price might be high is the P/E Ratio test and this test can be unreliable. See my spreadsheet on Fortis Inc.

I own this stock of Fortis Inc. (TSX-FTS, OTC-FRTSF). 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.

How have I done? My total return is 12.98% per year with 7.95% per year from capital gains and 5.03% per year from dividends. I have received dividends of $19.86 per share and my share cost is $6.81. That means that my dividends have paid 292% of my share cost.

For my original stock purchase in 1987made about 28 years ago, I am making a dividend yield of 32.26%. The dividends have gone up by 5.33% per year. For my 1995 purchase made about 20 years ago, I am making a dividend yield of 21.87%. The dividends have gone up by 6.40% per year. This is the reason you buy dividend growth stocks for future income.

Dividend yield on this stock is moderate to good. The current dividend yield is 3.71% based on a stock price of $40.47 and dividends of $1.50. The 5 year median dividend is 3.33% and the historical median is 3.64%. Dividend growth is low to moderate. The 5 and 10 year dividend growth is at 4.49% and 9.02%.

I think that they can afford their dividends. The Dividend Payout Ratio for EPS was 54% in 2015. The 5 year median DPR for EPS is higher at 72%. It is expected to be around 70% in 2016. The DPR for CFPS was 24% in 2015 and the 5 year median is 27%. It is expected to be around 28% in 2016.

The Liquidity Ratio is low. For 2015 it was 0.70. This means that the current assets cannot cover the current liabilities. However, if you add in cash flow after dividends the ratio becomes 1.19. This gives the company some vulnerability in bad times. Other debt ratios are fine.

The 5 year low, median and high median Price/Earnings per Share Ratios are 17.20, 18.72 and 20.24. The corresponding 10 year ratios are 16.32, 18.48 and 20.50. The corresponding historical ratios are 13.23, 15.50 and 17.72. The current P/E Ratio is 18.74 based on a stock price of $40.47 and 2016 EPS estimate of $2.16. The current stock price looks relatively reasonable and around the median.

I get a Graham Price of $37.30. The 10 year low, median and high median Price/Graham Price Ratios are 1.04, 1.16 and 1.26. The current P/GP Ratio is 1.09 based on a stock price of $40.47. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The 10 year Price/Book Value per Share Ratio is 1.51 and the current P/B Ratio is some 6.6% lower at 1.41. The current P/B Ratio is based on BVPS of $28.63 and a stock price of $40.47. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The current dividend yield is 3.71%. The historical median dividend yield is 3.64% a value some 1.8% lower. This stock price testing suggests that the stock price is relatively reasonable and below the median.

When I look at analysts' recommendations I find Buy and Hold recommendations. Most of the recommendations are a Buy and the consensus recommendation would be a Buy. The 12 month consensus stock price if $45.71. This implies a total return of 16.65% with 12.95% from capital gains and 3.71% from dividends. This is a good return for a utility.

Kay Ng of Motley Fool thinks that this stock is good if you want safe and growing dividend income. Nelson Smith of Motley looks at new technology and this company. See what some analysts are saying about this stock on Stock Chase.

I will have only one entry for this stock this year. However, I did a more complete report on this company in 2015 and you can see those reports here and here.

The last stock I wrote about was about was SNC-Lavalin Group Inc. (TSX-SNC, OTC-SNCAF)... learn more . The next stock I will write about will be Power Financial Corp. (TSX-PWF, OTC-POFNF)... learn more on Wednesday, May 4, 2016 around 5 pm.

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 Inc.

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. I have three blogs. The first talks only about specific stocks and is called Investment Talk . The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits.