One of my highest-conviction picks in recent years for those with income needs has been Fortis Inc. (TSX:FTS)(NYSE:FTS). This is a company that has not only shown an incredible amount of defensiveness through this past pandemic, but is a company with one of the most stable and growth-oriented dividends out there. This is extremely important for investors with growing income needs in retirement.
Indeed, I think a given stock’s dividend growth rate is more important than its current yield, for a number of reasons. A stock that predictably and reliably increases its dividend over the long-term allows investors with income needs to take in more each and every year in terms of dividends over the long-term.
Fortis has been extremely consistent, and historically has been one of the best Canadian stocks in this regard. The company has not missed an annual dividend increase in almost five decades. That’s right, through all the trials and tribulations of the past, the company’s cash flow growth has been so strong it has been able to grow its dividend distribution in good times and in bad.
Such dividend growth should require a significant premium in the market. Right now, Fortis is trading at a premium multiple to its peer group. That said, I think this premium should be even higher than where it is. Investors get what they pay for, and for those with income needs, Fortis is the gold standard for dividend stocks. I’d recommend anyone with a long-term dividend portfolio consider adding Fortis as a cornerstone holding at any time (now is as good a time as any).
Invest wisely, my friends.
