Today, I want to review one of my favorite good conservative dividend paying stock. I had written a blog awhile ago about stating a portfolio, and so I want to review some of the stocks I mentioned. See my site for this blog. I feel this is a superior stock to TransCanada, although I know a lot of analyst like TransCanada better.
I first bought this stock in 1987 and I have since bought more in 1995 and 1998. I sold off some in 2005 because a number of analyst were worried the stock was over priced. I regret this. On this stock, I have made a return of 13% per year. This is a great long term stock, or at least it has been a great one for me. I no longer consider selling stock that gets over priced, if I feel that stock is a good long term one.
This stock increased their dividends this year. The increase was 4%. This is not as high as the long term average for this stock, but a good increase considering what other stocks did this year. This stock is on the dividend lists that I follow of Dividend Achievers at www.indxis.com/DividendAchievers.html and Dividend Aristocrats list at www.tmxmoney.com/en/individual.html (see indices).
If you look at the growth for all items of Revenues, Earnings, Dividends, Total Return, Cash Flow and Book Value over the last 5 and 10 years, you will find that this stock has done well, or very well, for all items. In my portfolio, this stock has consistently provided me with a good dividend and good stock increase. I think that in a stock, good, consistent returns are very valuable.
The Return on Equity (ROE) for this stock was a little low in 2007 and 2008 coming in at just over 7%. However, this has picked up to a much better 10.5% for this third quarter of this year. No stock is perfect and what I do not like is the low Liquidity Ratio and low Asset/Liability Ratio. The Liquidity ratio is of most concern as it is usually around 0.60 and 0.70. This means that current assets cannot cover current liabilities. The Asset/Liability Ratio is also low coming in at just under 1.40. I would prefer both these ratios to be 1.50. However, for as long as I have followed this stock, these ratios have been consistently in these low ranges.
The other negative thing is the Accrual Ratio tends to be high. Like the Liquidity Ratio, it has always been high. However, when you add in the Financial Cash Flow, this Ratio comes down to a reasonable level. The good thing about the Accrual Ratio is that the Operational Cash Flow is consistently above the Net Income and this is certainly good.
In closing, I would like to say that I am pleased with this stock and I intend to hold what I have. On Monday, I will review what analysts have to say about this stock.
Fortis is a diversified, international distribution utility holding company. This company provides gas and electricity to customers across Canada, through regulated holdings that include a natural gas utility in British Columbia, and electric utilities in 5 provinces in Canada, and 3 Caribbean countries. It owns non-regulated hydroelectric generation assets across Canada and in Belize and upper New York State. It also owns and operates hotels in eight Canadian provinces as well as commercial real estate in Atlantic Canada. Its web site is www.fortisinc.com. See my spreadsheet at www.spbrunner.com/stocks/fts.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.
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