Is it a good company at a reasonable price? This is a good company to have in your portfolio. It is a little pricy at this time, but you should always buy stocks in installments over a few years and in different month. It is a utility so it provides a reasonable dividend that has been increasing over the years.
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, 1998 and 2005. 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.
When I was updating my spreadsheet, I noticed I have had this stock for 38 years and I have made a total return of 12.69% per year with 7.71% from capital gains and 4.98% from dividends. This stock, as for most utilities, does have a high debt load. Analyst recommendations go the full range from Strong Buy to Sell.
If you had invested in this company in December 2015, for $1,1010.07 you would have bought 27 shares at $37.41 per share. In December 2025, after 10 years you would have received $540.41 in dividends. The stock would be worth $1,926.72. Your total return would have been $2,467.13. This would be a total return of 10.64% per year with 6.67% from capital gain and 3.96% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $37.41 | $1,010.07 | 27 | 10 | $540.41 | $1,926.72 | $2,467.13 |
The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 3.32%. The 5, 10 and historical dividend yields are also moderate at 3.38%, 3.36% and 3.71%. The dividend increases have been low (below 8% per year) at 5.1% per year over the past 5 years. The last dividend increase was in 2025 and it was for 4.1%.
The Dividend Payout Ratios (DPR) are mostly fine. The DPR for 2025 for Earnings per Share (EPS) is high at 73% with 5 year coverage at 75%. The DPR for 2025 for Adjusted Earnings per Share (AEPS) is high at 70% with 5 year coverage at 74%. The DPR for 2025 for Adjusted Funds from Operations (AFFO) is fine at 63% with 5 year coverage at 65%. The DPR for 2025 for Cash Flow per Share (CFPS) is good at 30% with 5 year coverage at 31%. The DPR for 2025 for Free Cash Flow (FCF) is non-calculable due to negative FCFs.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 73.09% | 75.18% |
| AEPS | 70.40% | 74.49% |
| AFFO | 63.07% | 65.52% |
| CFPS | 30.16% | 30.86% |
| FCF | -40.00% | -132.82% |
Debt Ratios should be improved, but utilities often have high debt. The Long Term Debt/Market Cap Ratio for 2025 is fine at 0.85 and currently at 0.78. The Liquidity Ratio for 2025 is far too low at 0.51 and 0.51 currently. If you added in Cash Flow after dividends, the ratios are still too low at 0.88 and currently at 0.90. I like to see the Liquidity Ratio at 1.50 or high. It is too low when below 1.00. If you add back in current debt the ratio is 1.51 and currently at 1.55. The Debt Ratio for 2025 is good at 1.53 and 1.53 currently. The Leverage and Debt/Equity Ratios for 2025 are fine at 2.89 and 1.89 and currently at 2.89 and 1.89.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.85 | 0.78 |
| Intang/GW | 0.39 | 0.36 |
| Liquidity | 0.51 | 0.51 |
| Liq. + CF | 0.88 | 0.90 |
| Liq. +CF+D | 1.51 | 1.55 |
| Debt Ratio | 1.53 | 1.53 |
| Leverage | 2.89 | 2.89 |
| D/E Ratio | 1.89 | 1.89 |
The Total Return per year is shown below for years of 5 to 44 to the end of 2025. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2020 | 5 | 5.10% | 10.39% | 6.53% | 3.85% |
| 2015 | 10 | 5.94% | 10.64% | 6.67% | 3.96% |
| 2010 | 15 | 5.46% | 8.59% | 5.07% | 3.52% |
| 2005 | 20 | 7.47% | 9.11% | 5.54% | 3.57% |
| 2000 | 25 | 6.98% | 13.65% | 8.63% | 5.01% |
| 1995 | 30 | 6.08% | 13.08% | 8.14% | 4.94% |
| 1990 | 35 | 5.69% | 12.61% | 7.65% | 4.96% |
| 1985 | 40 | 5.76% | 12.23% | 7.25% | 4.98% |
| 1981 | 44 | 6.08% | 13.32% | 7.52% | 5.80% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 17.10, 19.37 and 21.64. The corresponding 10 year ratios are 17.36, 19.37 and 21.34. The corresponding historical ratio are 13.23, 15.50 and 17.72. The current ratio is 21.35 based on a stock price of $77.17 and EPS estimate $3.62. The current ratios are above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 16.47, 18.66 and 20.85. The corresponding 10 year ratios are 16.43, 18.41 and 20.38. The corresponding historical ratio are 16.43, 18.26 and 20.00. The current ratio is 21.14 based on a stock price of $77.17 and EPS estimate $3.65. The current ratios are above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $60.01. The 10-year low, median, and high median Price/Graham Price Ratios are 0.96, 1.08 and 1.20. The current Ratio is 1.29 based on a stock price of $77.17. The current ratios are above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Book Value per Share Ratio of 1.40. The current ratio is 1.76 based on a stock price of $77.17, Book Value of $22,323M and Book Value per Share of $43.85. The current ratio is 26% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have a Book Value per Share estimate for 2026 of $47.60. This analyst calculates the Book Value differently than I do and here the 10 year median ratio is 1.27. This implies a ratio of 1.62 based on a stock price of $77.17 and Book Value of $24,233M. The current ratio is 27% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Cash Flow per Share Ratio of 8.41. The current P/CF Ratio is 9.21 based a Cash Flow per Share estimate for 2026 of $8.38, Cash Flow of $4,264M and a stock price of $77.17. The current ratio is 10% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 3.71%. The current dividend yield is 3.32% based on dividends of $2.56 and a stock price of $77.17. The current dividend yield is 10% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median dividend yield of 3.36%. The current dividend yield is 3.32% based on dividends of $2.56 and a stock price of $77.17. The current dividend yield is 1.4% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10-year median Price/Sales (Revenue) Ratio is 2.48. The current P/S Ratio is 2.96 based on Revenue estimate for 2026 of $13,291M, Revenue per Share of $26.11 and a stock price of $77.17. The current ratio is 19% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price is probably still in a reasonable range, but at the top end. The 10 yar dividend yield test says that the ratio is above the median by only 1.4%, but the P/S Ratio test says it is above the median by 19%. A lot of the rest of the testing is saying that the stock price is relatively expensive.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (3), Hold (6), Underperform (2), Sell (2). The consensus would be a Hold. The 12 month stock price consensus is $78.90 with a high of $85.00 and low of $71.00. The consensus stock price of $78.90 implies a total return of 5.56% with 2.24% from capital gains and 3.32% from dividends based on a current stock price of $77.17.
Some analyst on Stock Chase think this stock is a hold because of its price. Kay Ng on Motley Fool thinks this is a solid stock to own in your TFSA, but $65 to $70 price would be better. Andrew Walker on Motley Fool says that the company is working on a capital program that will significantly boost the rate base and support future dividend increases. The company put out a Press Release about their fourth quarter of 2025 results. The company put out a Press Release about their first quarter of 2026 results.
Simply Wall Street via Yahoo Finance says that analysts are definitely expecting Fortis growth to accelerate. Simply Wall Street has two warnings of interest payments are not well covered by earnings; and dividend of 3.4% is not well covered by free cash flows.
Fortis owns and operates eight utility transmission and distribution subsidiaries in Canada and the United States. The company has smaller stakes in electricity generation and several Caribbean utilities. Its web site is here Fortis Inc.
The last stock I wrote about was about was AtkinsRealis Group Inc (TSX-ATRL, OTC-SNCAF) ... learn more. The next stock I will write about will be McCoy Global Inc (TSX-MCB, OTC-MCCRF) ... learn more on Friday, May 22, 2026 around 5 pm. Tomorrow on my other blog I will write about Talk About Tipping .... learn more on Thursday, May 21, 2026 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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.
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