Fortis (TSX:FTS) stands out as one of the most dependable dividend stocks for generating long-term passive income. As a leading electric and gas utility, the company operates a low-risk, regulated business that delivers stable and growing cash flows—providing strong support for its dividend distributions.
A significant 93% of Fortis’s operations are focused on electricity and natural gas transmission and distribution. This business model protects the company from the risks tied to power generation and the volatility of commodity prices, ensuring resilient cash flows across various market conditions.
Investment and Dividend Details
Currently, Fortis pays a quarterly dividend of $0.615 per share, equating to a yield of over 3.6%. While this may not be the highest yield among dividend stocks, the true strength of Fortis lies in the reliability and growth of its payouts. The company has an impressive track record, having increased its dividend for 51 consecutive years. Management remains confident this trend will continue, backed by a growing rate base and rising demand for electricity.
To support long-term earnings growth, Fortis is heavily investing in infrastructure to expand its regulated rate base. Management expects a compound annual growth rate (CAGR) of 6.5% in the rate base through 2029. This expansion is anticipated to fuel steady earnings and support annual dividend growth in the range of 4% to 6%.
With increasing energy demand on the horizon, Fortis is strategically positioned to benefit. Its ongoing investments in modernizing transmission systems and upgrading infrastructure allow it to meet the electricity needs of high-consumption sectors like data centres, manufacturing, and mining—ensuring the company remains a reliable income-generating asset well into the future.
Financial Performance
For the second quarter of 2025, Fortis reported net earnings attributable to common equity shareholders of $384 million, or $0.76 per common share. This represents an increase of $53 million, or $0.09 per share, compared to the same quarter in 2024. The earnings growth was primarily driven by the ongoing expansion of the company’s rate base across its utility operations. Key contributors included returns from FortisBC Energy’s investment in the Eagle Mountain Pipeline project and improved results at Central Hudson, which benefited from a revenue requirement reset effective July 1, 2024, as well as the timing of operating expenses in 2025.
Outlook
Fortis remains focused on delivering long-term shareholder value through the execution of its robust capital investment plan and the continued performance of its diversified portfolio of regulated utilities. The company’s five-year capital plan, totaling $26.0 billion, is expected to grow the midyear rate base from $39.0 billion in 2024 to $53.0 billion by 2029—representing a compound annual growth rate (CAGR) of 6.5%. This steady rate base expansion is projected to drive earnings growth that supports the company’s dividend growth guidance of 4% to 6% annually through 2029.
Stock Recommendation
Considering the above facts, a “Buy” rating has been given at the closing price of CAD 67.90 per share as on September 10, 2025
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