Fortis (Symbol-FTS)
- investor99
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huh...very tough to define what these are...Safe stocks
I agree that this is what is occuring. Fortis has a 4.8% yield but is still trading at a P/E of almost 14x. I like the dividend for a leveraged strategy but the stock always seems expensive. Their last dividend raise did not inspire much confidence. I want the stock to drop lower.
disclosure - I own FTS
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Maybe I should have said 'growth' stocks. FTS is fully priced, doesn't have amazing growth prospects, but growth the dividend at a stable rate.investor99 wrote:huh...very tough to define what these are...Safe stocks
I agree that this is what is occuring. Fortis has a 4.8% yield but is still trading at a P/E of almost 14x.
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....FTS is fully priced, doesn't have amazing growth prospects, but growth the dividend at a stable rate.
I think there is a stat that says that FTS has raised its dividend every year for the past 36 years. That's my recollection - but no guarantee.
I think FTS is an exceptional buy here. TD has it as an "Action List Buy" - their 12-month target is $29 (fwiw); it's "LOW" risk; and there has been insider buying.
Buy it here in the $21.50 - $22 range; and you'll likely get a bounce to $23+; and a dividend within a month. And if you're nervouse, sell call options on the stock.
A very safe, very conservative holding with the prospect of an easy 20-25% return (growth; option premiums; and dividends).
I think there is a stat that says that FTS has raised its dividend every year for the past 36 years. That's my recollection - but no guarantee.
I think FTS is an exceptional buy here. TD has it as an "Action List Buy" - their 12-month target is $29 (fwiw); it's "LOW" risk; and there has been insider buying.
Buy it here in the $21.50 - $22 range; and you'll likely get a bounce to $23+; and a dividend within a month. And if you're nervouse, sell call options on the stock.
A very safe, very conservative holding with the prospect of an easy 20-25% return (growth; option premiums; and dividends).
Except if there is general market sentiment that we are at the bottom and heading into (slightly) better times, the utility stalwarts will probably stall in share price, regardless of dividend growth.
I tend to believe that (some) utilities are generally expensive at the current time. Having said that, I own and will continue to own some of these as my core dividend blue chips for the longer term.
I tend to believe that (some) utilities are generally expensive at the current time. Having said that, I own and will continue to own some of these as my core dividend blue chips for the longer term.
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Excerpt from RBC Capital Markets research report dated March 20, 2009
- Fortis Could be an Indirect Beneficiary from NEB Decision. The National Energy Board (NEB) released its cost of capital decision for the TQM pipeline, which had the effect of significantly increasing the allowed ROE by roughly 300 basis points.
- Potentially Significant Earnings Upside. Using the framework of the NEB's decision, we estimate that Fortis could realize about $0.22/share of increased earnings.
- Key Risk: Provincial Regulators May Not Follow Suit. The NEB decision does not have any direct impact on Fortis, and it is possible that the provincial regulators may not follow the NEB's lead and increase ROEs. Even if they do, it is uncertain as to how much they will increase returns. However, given the magnitude of the increase in ROEs implied by the NEB's decision, we believe it will be very difficult for the provincial regulators to not improve returns. If there is no ROE relief, it may become difficult for provincially-regulated utility businesses to attract capital given what would be a significant difference in ROEs relative to NEB-regulated pipelines without a meaningfully different risk profile.
- Valuation: Target Price Increased to $27.00 (from $25.00). Our new price target includes roughly half of the estimated upside from higher ROEs. We have used 50% of the potential upside to account for uncertainty as to whether provincial regulators will follow the NEB's lead and increase allowed returns and if they do, how much the increased ROEs will be.
- Fortis Could be an Indirect Beneficiary from NEB Decision. The National Energy Board (NEB) released its cost of capital decision for the TQM pipeline, which had the effect of significantly increasing the allowed ROE by roughly 300 basis points.
- Potentially Significant Earnings Upside. Using the framework of the NEB's decision, we estimate that Fortis could realize about $0.22/share of increased earnings.
- Key Risk: Provincial Regulators May Not Follow Suit. The NEB decision does not have any direct impact on Fortis, and it is possible that the provincial regulators may not follow the NEB's lead and increase ROEs. Even if they do, it is uncertain as to how much they will increase returns. However, given the magnitude of the increase in ROEs implied by the NEB's decision, we believe it will be very difficult for the provincial regulators to not improve returns. If there is no ROE relief, it may become difficult for provincially-regulated utility businesses to attract capital given what would be a significant difference in ROEs relative to NEB-regulated pipelines without a meaningfully different risk profile.
- Valuation: Target Price Increased to $27.00 (from $25.00). Our new price target includes roughly half of the estimated upside from higher ROEs. We have used 50% of the potential upside to account for uncertainty as to whether provincial regulators will follow the NEB's lead and increase allowed returns and if they do, how much the increased ROEs will be.
I don't think you will see much appreciation in share price with this type of stock. They are somewhat different businesses, but generally could be termed the intermediaries between the fuel supply and the market. Price range for their services is limited but fairly dependable. Their service is difficult to replicate, so a good high moat business to own. They should be bought for their dividend paying qualities and to smooth out market bottoms like this one.jay wrote:Can someone please shed some light as to why great names like FTS and TRP are close to their 52 weak lows when major indices are ~25% above?
Thanks
FTS - 10 years of dividends / 7 years of dividend increases
TRP - 10 years of dividends / 4 years of (modest) increases
www.dividendinvestors.ca
I own both.
Cheers
"A dividend being paid today is always a positive return." Josh Peters, Morningstar
"A dividend being paid today is always a positive return." Josh Peters, Morningstar
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Actually, FTS has 36 consecutive years of dividend growth:
http://www.fortis.ca/investorcentre/for ... story.aspx
The present weakness might be explained by the modest yield, less than what's available from many corporate bonds or preferred shares. The recent 4 cents a year dividend increase was underwhelming, but last year it was raised 19%. FTS is currently attractively priced for income investors as a long term core holding.
I also like TRP under $30. This will be a year of flat or slightly declining earnings growth, but 2010 and beyond looks very promising.
http://www.fortis.ca/investorcentre/for ... story.aspx
The present weakness might be explained by the modest yield, less than what's available from many corporate bonds or preferred shares. The recent 4 cents a year dividend increase was underwhelming, but last year it was raised 19%. FTS is currently attractively priced for income investors as a long term core holding.
I also like TRP under $30. This will be a year of flat or slightly declining earnings growth, but 2010 and beyond looks very promising.
Ditto. When I consider at how cheap I've purchased some of the stocks in my portfolio I don't mind paying a little bit of a premium for a high quality company.2 yen wrote:...and consider Fortis a core holding.
Would I like to see it cheaper? Sure...but I'm realistic in the fact that I'd rather have it over the next 20 years then always be moaning about the fact its "not quite as cheap as I'd like." There are times when you pay for quality and FTS, for my portfolio, is one of few that I don't mind paying a higher P/E for limited growth prospects. That being said they do have operations outside of Canada that I would expect them to build upon over the next decade.
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Thanks for that link! Their 36-year history of increases is the stat I remember....and it really is quite amazing. I can't think of a better buy in this kind of market. It's been sold off the last few days as the "smart??" money moves into cyclicals for the forthcoming boom times. Trouble is....I don't really see boom times ahead for the forseeable future!JaydoubleU wrote:Actually, FTS has 36 consecutive years of dividend growth:
http://www.fortis.ca/investorcentre/for ... story.aspx
The present weakness might be explained by the modest yield, less than what's available from many corporate bonds or preferred shares. The recent 4 cents a year dividend increase was underwhelming, but last year it was raised 19%. FTS is currently attractively priced for income investors as a long term core holding.
I also like TRP under $30. This will be a year of flat or slightly declining earnings growth, but 2010 and beyond looks very promising.
- scomac
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Yup. We're seeing the same sort of trading activity going on with MRU.A as well; another of those good place to be in tough times stocks.iluvnascar wrote:It's been sold off the last few days as the "smart??" money moves into cyclicals for the forthcoming boom times. Trouble is....I don't really see boom times ahead for the forseeable future!
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- investor99
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RCI.B is one I'm finding hard to understand. Is it just too low a yield and too high a P/E that is keeping it down? I was actually pretty happy with the 16% dividend increase... woops! This is the FTS thread.
Anyway, add RCI.B to the list, including FTS, TRP, SAP, of "relatively stable" dividend growers being shunned in favor of the financials, cyclicals. Short-term money/thinking at play creates opportunity for long term investors
Anyway, add RCI.B to the list, including FTS, TRP, SAP, of "relatively stable" dividend growers being shunned in favor of the financials, cyclicals. Short-term money/thinking at play creates opportunity for long term investors
A more cautious view of FTS by knowledgeable blogger Thicken My Wallet in a December post:
Scroll down to Fortis: Welcome to the Future ?
You'll find the complete post at: http://www.thickenmywallet.com/blog/wp/ ... tegorized/Fortis has an interest coverage ratio of 1.73 (this is a ratio measuring earnings before interest and tax over interest expenses; or, it measures how easily a company can pay back debt). This is not a great ratio...
Scroll down to Fortis: Welcome to the Future ?
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Methinks I'll stick with David Baskin, it was his top pick as recent as Feb/09 and RBC recently raised their target.
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- Peculiar_Investor
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From their Investor Information webpage, http://www.fortisinc.com/InvestorCentre/ they are saying Q1 earnings expected on April 30th.Shifty wrote:Wasn't yesterday supposed to be Q1 reporting for FTS? Can't find any info as of yet.
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- investor99
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Earnings were up 1% but because they issued shares EPS was down 5.5%.While increased earnings in Fortis Inc.'s (FTS.T) regulated electric utilities operations in western Canada were partly offset by lower earnings in its Caribbean regulated utilities and Fortis Properties divisions, the company was still able to generate slightly stronger earnings in its latest quarter.
First-quarter earnings rose to C$92 million or 52 Canadian cents a share from C$91 million or 55 Canadian cents a year earlier. There were about 13% more shares outstanding in the latest period.
Analysts expected earnings of 57 Canadian cents a share in the first quarter.
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If may 6 is the ex div day then may 6th
is a day the stock is sold without (ex) the div
and
is also the day the stock is bought without(ex) the div
therefore you need to buy may 5th or sooner to get it.
added
http://www.fortis.ca/investorcentre/for ... dends.aspx
2q/09 date of record is may 8th, your settlemnet date needs to be on or before that date.
is a day the stock is sold without (ex) the div
and
is also the day the stock is bought without(ex) the div
therefore you need to buy may 5th or sooner to get it.
added
http://www.fortis.ca/investorcentre/for ... dends.aspx
2q/09 date of record is may 8th, your settlemnet date needs to be on or before that date.