1 Canadian Stock That Comes Close to Perfect as a Long-Term Hold

Every stock carries risk, which is why investors looking for that next long-term hold need to consider diversification. Fortunately, there are some stocks that can provide that defensive appeal while still providing income and growth appeal.

One of those stocks is Fortis (TSX:FTS). It’s not the most popular or flashiest stock on the market. It’s also not tied to commodity prices or AI, which makes it fly under the radar.

Instead, this reliable Canadian utility stock owns essential, regulated assets and has a long history of rewarding patient shareholders.

That’s a powerful combination that makes Fortis a near-perfect option for investors seeking that next long-term hold.

Why Fortis comes close to perfect

Calling any stock perfect is a stretch. Markets can change, interest rates fluctuate, and even defensive picks aren’t entirely immune to the market.

That’s where Fortis checks off a lot of the right boxes.

The business is easy to understand. Fortis is a utility stock that provides a necessary service to the communities that it serves. That includes both regulated electric and gas utility assets across multiple operating regions.

That service is backed by long-term regulated contracts that often span decades in duration. This provides Fortis with a level of predictability that other businesses can’t offer.

It also means that Fortis can continue providing essential utility service while investing in infrastructure and future growth.

A utility business built on necessity

Fortis operates across Canada, the United States, and the Caribbean. Its regulated electricity and gas operations give the business a defensive foundation.

This is an important distinction that’s often overlooked. Utility demand doesn’t disappear when markets become volatile. People still need electricity and still need to heat their homes. Businesses still need reliable power.

This makes Fortis less dependent on changing consumer trends and more of a boring, reliable business.  

And that’s Ok. In fact, that’s the main appeal of Fortis. The company owns assets that are hard to replace and provides services that customers cannot easily cut from their budgets.

This is also one area where Fortis dispels the boring utility stereotype.

That’s because Fortis is investing heavily in growth. The company has a whopping $28 billion capital program that runs through the end of the decade. That capital program targets clear growth areas to help grow Fortis’ rate base over time. That includes upgrading existing facilities and infrastructure as well as transitioning some assets over to renewables.

That gives Fortis a clear path to future earnings growth, assuming it continues executing well. It also reinforces why Fortis remains one of the best options for long-term investing.

Dividend growth adds to the appeal

One of the main reasons why Fortis appeals to investors as a long-term hold is the company’s dividend. As of the time of writing, Fortis offers a quarterly dividend with a yield of 3.2%.

That’s not the highest yield on the market, but it is stable and growing. In fact, Fortis has provided investors with annual increases to that dividend for 53 consecutive years. The company also plans to maintain that cadence with annual upticks of up to 6% continuing through 2030.

That incredible streak is nearly unheard of in Canada. In fact, Fortis is one of just two Dividend Kings in Canada with streaks exceeding 50 consecutive years.

For investors seeking an investment as a long-term hold, that puts Fortis into its own league, especially for patient investors. Steady dividend growth helps accelerate compounding and can provide a cash flow boost over the years.

For long-term investors, the blend of regulated stability and consistent dividend growth makes Fortis a standout choice. For investors who want stability first, Fortis fits the idea of a long-term hold because the business is simple, essential, and built around predictable cash flow.

In my opinion, Fortis is one of, if not, the long-term hold that should be part of any well-diversified portfolio.

The post 1 Canadian Stock That Comes Close to Perfect as a Long-Term Hold appeared first on The Motley Fool Canada.

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More reading

• 5 Canadian Stocks Beginners Can Buy and Hold Forever
• 4 Dividend Stocks to Buy and Hold for the Next 4 Years
• 3 Canadian Dividend Stocks Perfect For Retirees
• 5 TSX Dividend Stocks for Steady Cash Flow in Any Market
• 2 Canadian Dividend Stocks to Hold When Markets Get Bumpy

Fool contributor Demetris Afxentiou has positions in Fortis. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.