If You Invested $5,000 In Fortis Stock In 2014, Here’s How Much You’d Have Today

Written by Amy Legate-Wolfe at The Motley Fool Canada

If there is one company that Canadians come back to time and time again for their dividends, it is this one. Fortis (TSX:FTS). It has been that way for years, and it is especially true now that it is the Dividend King. That means the company has increased its dividend every year for the past 50 years!

But has that been enough over the past decade? If you had invested $5,000 in 2014 in about 167 stocks, your portfolio would be worth about $8,833.51 today. Of course, that’s not bad, especially when you consider that dividends during that time were about $3,533.54! That’s a total portfolio worth $12,367.05!

Will Fortis shares maintain this level? Let’s take a look.

Why Fortis?

Fortis is a leading North American utility company founded in 1987. It operates a diversified portfolio of electric and gas utilities in Canada, the United States and the Caribbean. The company’s operations include power generation, transmission and distribution, serving more than three million customers in its regions. Fortis is known for its stable performance, conservative management and focus on regulated utility operations that provide stable and predictable cash flows.

One of Fortis’ key strengths is its commitment to growth through strategic acquisitions and capital investments. Over the years, Fortis has expanded its presence through significant acquisitions. In addition, the company continues to invest in its infrastructure, focusing on increasing the reliability and efficiency of its services, integrating renewable energy sources and modernizing its network.

Latest results

As for the latest results, Fortis shares posted strong earnings in the second quarter of 2024. The company posted a net income of $0.49 per share, beating analyst estimates of $0.47 per share. Revenue for the second quarter came in at $2.35 billion. While this was slightly below market expectations of $2.42 billion, the company’s overall profitability remained solid.

The story continues

In addition, Fortis emphasized its commitment to sustainability and long-term growth. The company highlighted ongoing investments in renewable energy projects and grid modernization as part of its strategy to reduce carbon dioxide emissions and support a cleaner energy future. Fortis aims to achieve a 75% reduction in greenhouse gas emissions by 2035. While this should attract environmentally conscious investors, it is also a future opportunity for further growth.

Is there any value there?

That’s the big question. And here, Fortis stock seems to hold value based on its historical performance and future potential. Historically, Fortis has shown strong share price growth and consistent dividend growth. As we’ve seen, a $5,000 investment in 2014 would be worth about $12,367.05 today, indicating significant gains over the past decade.

From a valuation perspective, Fortis stock also looks attractive. The stock is trading at a price-to-earnings (P/E) ratio of 18.15 and a forward P/E of 18.08, suggesting that the market has consistent earnings expectations. A price-to-book (P/B) ratio of 1.36 indicates that the stock is reasonably priced relative to its book value.

In addition, Fortis’s enterprise value/earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio of 11.48 suggests a solid profitability profile. Despite a lower beta of 0.19, indicating lower volatility compared to the market, Fortis achieved a respectable 52-week change of 7.74%. However, this is below the S&P500’s change of 21.63%.

Summary

The question is whether today’s value can indicate future growth. And in this case, it looks like it can. The future value prospects of Fortis stock are bolstered by a high dividend yield of 4.13%, higher than the five-year average dividend yield of 3.74%. The company’s payout ratio of 73.80% also shows a commitment to returning profits to shareholders while preserving enough capital for growth investments. In short, if you’re looking for a similar pattern over the next decade, Fortis stock could be for you.

The article If You Invested $5,000 in Fortis Stock in 2014, Here’s How Much You’d Have Today first appeared on The Motley Fool Canada.

Before you buy Fortis shares, consider the following:

The Motley Fool Stock Advisor Canada a team of analysts have just identified what they believe is Top 10 Stocks for investors to buy now… and Fortis wasn’t one of them. The 10 stocks that made the cut have the potential to deliver monster gains in the years to come.

To consider MercadoLibrewhich we first recommended on January 8, 2014… if you had invested $1,000 in “eBay Latin America” ​​at the time of our recommendation, you would have $16,864.27!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including portfolio-building tips, regular analyst updates, and two new stock picks each month – one from Canada and one from the United States. Stock Advisor Canada The service has outperformed the S&P/TSX Composite Index by 27 percentage points since 2013.*

See 10 actions * Returns from 31.07.24

More to read

Fool contributor Amy Legate-Wolfe has no position in any stocks mentioned. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.

2024