We know the markets go up and down, we never are positive when each happens. Thus part of investing is to buy holdings that will earn profits throughout the market cycles and rewards investors just for holding on to it. The classic companies for a variety of reasons tend to be utilities. One of the utilities is called Fortis and Jennifer Dowty (jdowty@globeandmail.com)  recently reviewed the stock.

The company is a North America utility with operations in Canada, the US and Caribbean.

Low risk regulated assets – 96% of its assets are regulated utilities. The great thing about regulators are they tend to be compensated higher than average wages which means they are more swayed by return on assets than trying to pay the bill on time. Return on assets tends to mean prices charged by the utility go up each year.

Diversified portfolio – the provinces and states where the utility has customers no single state(s) represent more than a 1/3 of its earnings. The world has to go into a downturn not just a single state.

Acquisition growth – the company recently bought a utility in Michigan called ITC which is expected to be completed by the end of the year.

Base rate growth – the base rate of growth has been 4.5%, with the ITC purchase it should move to 7.5%.

Capital investments – the company is spending $ 9 billion over 5 years

Reliable dividends combined with growth – the company pays 37.5 cents a share or $1.50 per year. In addition for the past 42 years the dividend has been increased annually. Management expects that to continue with a minimum 6% growth.

At the moment, the stock is trading along its historical PE Ratio average of 17 times.

Linking to dividend paying stocks, Fortis is a company which you are looking to own – through the regulation it continues to earn money and regulation helps ensures prices go up in the future. The company is diversified, recently became bigger and soon with be able to buy another company as the utility market consolidates.

There are more questions than answers, till the next time – to raising questions.