Two Utilities to Hold into 2020

Bond yields have plunged sharply in the summer of 2019, which has driven a flight into alternatives. Many income investors have turned to equities like utilities. These are attractive for their typically wide economic moat and consistent dividend payouts.

Today I want to look at two that investors would be wise to hold onto as rates look to soften into the next decade.

Fortis (TSX:FTS)(NYSE:FTS) stock has climbed 25% in 2019 as of close on September 6. Adjusted net earnings fell to $235 million or $0.54 per share compared to $251 million or $0.59 per share in the prior year. Earnings were negatively impacted by unfavourable weather in Q2. Still, Fortis remains appealing with its price-to-earnings ratio of 19.8 and price-to-book of 1.5.

The stock offers a quarterly dividend of $0.45 per share which represents a 3.2% yield. Fortis has achieved dividend-growth for 45 consecutive years.

Emera (TSX:EMA) stock has increased 34% in 2019 so far. It reported adjusted net income of $130 million or $0.54 per share in the second quarter, compared to $111 million or $0.48 per share in Q2 2018. Emera also saw its year-to-date operating cash flow rise $8 million year over year.

Shares of Emera boast a P/E ratio of 17.6 and a P/B of 1.8. Emera offers a quarterly dividend of $0.5875 per share, representing a solid 4.1% yield. It has achieved 12 straight years of dividend growth.

Both Fortis and Emera have surged on the back of favourable macro conditions, as well as solid results. These conditions are still present as we look ahead to the fall.