Source: David Howell and Fortis.
  • Fortis (TSX:FTS) is charting a path of steady growth in its 2024-2028 outlook
  • The company plans to invest C$25 billion over the period with a focus on clean energy and expects a rate base CAGR of 6.3 per cent
  • Fortis is a diversified North American regulated electric and gas utility company
  • Fortis stock (TSX:FTS) is up by 33.33 per cent over the past five years

Fortis (TSX:FTS) is charting a path of steady growth in its 2024-2028 outlook.

The outlook delineates a capital plan of C$25 billion – the largest in the company’s history, and $2.7 billion above its previous five-year plan – supported by:

  • The U.S. Inflation Reduction Act of 2022
  • Regional transmission projects at subsidiary ITC associated with tranche one of the Midcontinent Independent System Operator long-range transmission plan
  • Investments in Arizona to support Tucson Electric Power’s exit from coal
  • Investments supporting system adaptation and resiliency, customer growth and economic development 

Fortis characterizes the five-year plan as “low risk and highly executable” because of its nearly 100 per cent regulated investments, with 18 per cent of capital going to major projects, and 27 per cent of it to cleaner energy investments, including “connecting renewables to the grid, renewable and storage investments in Arizona and the Caribbean, and cleaner fuel solutions in British Columbia,” according to a statement released Tuesday.

Management expects the plan to increase its mid-year rate base from $36.8 billion in 2023 to $49.4 billion by 2028, yielding a five-year CAGR of 6.3 per cent on a constant foreign exchange basis.

Funding will primarily stem from cash from operations and regulated debt, Fortis’ dividend reinvestment plan and an at-the-market common equity program.

The Fortis board declared a $0.59 dividend to be issued on Dec. 1, 2023, to shareholders as of the close of business on Nov. 17, 2023. The 4.4 per cent increase in the quarterly dividend marks 50 consecutive years of dividend increases for the company.

Fortis is confident that long-term growth in rate base will “drive earnings that support annual dividend growth.” This allows the company to extend its annual dividend growth guidance of 4-6 per cent by one year through 2028.

In terms of growth opportunities beyond 2028, the company identifies four potential vectors:

  • Expansion of the U.S. electric transmission grid to increase clean energy access
  • Climate adaptation and grid resiliency investments
  • Renewable gas solutions and liquefied natural gas infrastructure in British Columbia
  • The acceleration of cleaner energy infrastructure investments 

“Our board of directors declared a fourth quarter dividend representing a 4.4 per cent increase that will mark 50 years of consecutive increases in dividends paid,” David Hutchens, president and CEO of Fortis, said in a statement. “This makes Fortis one of only two companies listed on the Toronto Stock Exchange to reach this significant milestone.”

“Our sustainable regulated growth strategy is focused on delivering cleaner energy that remains affordable and reliable for our customers while supporting annual dividend growth of 4-6 per cent through 2028,” he added.

Fortis is a diversified North American regulated electric and gas utility company. Its 9,200 employees serve customers in five Canadian provinces, 10 U.S. states and three Caribbean countries.

Fortis stock (TSX:FTS) last traded at $56.37 per share. The stock is up by 33.33 per cent over the past five years.

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