The markets have been erratic in recent weeks and a trade war involving oil prices is creating even more instability. For investors, finding a safe stock to hold right now is more challenging than ever. But one place that continues to be good is in utilities.
Fortis Inc (TSX:FTS)(NYSE:FTS) was down at the open on Monday like many other stocks. It fell more than 5% while many oil and gas stocks plunged by 20% and higher. Even stocks in other industries experienced significant selloffs.
Its more modest losses prove again why it’s good to own a low-beta stock like Fortis – its beta is just 0.22, well below the 1.0 that a stock that follows the market is at.
Another great reason to hold shares of Fortis is that it pays a dividend. And at more than 3%, it’s a solid payout that the company continues to grow. Quarterly dividend payments of $0.4775 have increased by 12% from two years ago when the company was making payments of just $0.425.
The benefit of holding Fortis over a long period is that years from now its dividend will likely be even higher than it is today. But while your investment remains constant, that means you’ll be earning more from it, and thus, your effective return becomes higher.
And with Fortis coming off a strong 2019 where its profit margin was a solid 18%, there’s little concern about its future.
The company’s operating margin has been very healthy at over 28% in each of the past three years. Strong fundamentals, low volatility, and a great dividend make Fortis a great stock to hold at any time.
