In assessing the health of the overall global economy, many, including myself, tend to believe that a correction is on the near to medium-term horizon. With the threat of a bear market constantly on the mind of many investors given the volatility financial markets have experienced of late, finding companies to protect a portfolio over the long-term can be difficult to do.
One company I see as a potential hedge against a bear market is Fortis Inc. (TSX:FTS)(NYSE:FTS) for a couple of key reasons. First, from a fundamental basis, Fortis remains one of the best value plays among its peers on the TSX in the utilities sector today.
The company has a track record of raising dividends every year, doing so for more the four decades, making this company a very special one for long-term investors. The company has provided forward guidance which lays out dividend increases in the high-single-digit range, and expects to increase earnings per share at a double-digit clip, making this a company with great earnings growth potential in addition to a relatively solid balance sheet currently.
Secondly, Fortis is a company which benefits in a low or declining interest rate environment; the short-term headwinds Fortis shareholders have seen of late due to rising interest rates are likely to be reversed in the case of a recession, at which point in time central banks around the world have stated their inclination to ease monetary policy and lower interest rates, providing a boost to companies holding higher than average dividend yields such as Fortis.
Invest wisely, my friends.
