In the otherwise stable world of high-yielding equities, today's rising interest rate environment has provided a jolt of volatility which has not been seen in some time in this sector. Companies such as Fortis Inc. (TSX:FTS)(NYSE:FTS) which are the definition of "steady Eddie" companies over very long periods of time have seen valuations pull back in recent months amid a shift in investor sentiment toward bonds and other fixed income securities and away from excellent opportunities within sectors such as utilities.
I have a few utilities firms on my watch list, however Fortis is unique in that it is one of my top picks as an excellent dividend grower (the company has grown its annual dividend distribution for more than four decades), underpinned by a very robust long-term annual growth rate of around 6% per year.
With very few companies in this sector able to make acquisitions and generate synergies as well as Fortis, I expect to see the company continuing to grow at this clip for the foreseeable future, making Fortis an excellent company from both a yield and a growth standpoint.
Fortis is also one of the most well-diversified utilities companies out there, as the firm has expanded in a big way into the U.S. market, providing investors with upside in the medium to long-term from U.S. growth which is expected to outpace its G7 peers. With tax rates declining in the U.S. market, along with a number of other positive headwinds set to play out in the years to come, Fortis is a company which should be on every investor's watch list.
Invest wisely, my friends.
