Fortis extends capital plan and dividend growth guidance, reinforcing defensive income profile

What happened

Fortis has introduced a new five-year C$28.8 billion capital plan targeting roughly 7% annualized rate base growth, focused on low-risk regulated transmission and distribution projects across its North American footprint. At the same time, the company raised its dividend by 4% and extended guidance for 4–6% annual dividend growth through 2030, adding an extra year of visibility relative to the 2029 horizon in our prior work. Recent results point to steady earnings with particularly strong contributions from U.S. operations and a resilient regulatory profile that supports timely cost recovery and justifies a premium valuation versus peers. The updated plan is consistent with Fortis’ long-term strategy of regulated grid investment in U.S. transmission, resiliency, and BC LNG/RNG/AMI, while sector-wide execution risks from transformer shortages and rate affordability scrutiny remain intact. Overall, the announcement reinforces Fortis’ positioning as a stable, income-oriented utility with visible mid-single-digit growth, rather than fundamentally altering its risk or growth profile.

Implication

For investors, the clarified C$28.8 billion capex plan with a 7% rate base CAGR underpins management’s 4–6% dividend growth target through 2030 and improves visibility on cash flow available for dividends. Because this investment is concentrated in regulated T&D with generally constructive frameworks, it should translate into relatively predictable earnings and dividend growth, though investors must continue to monitor regulatory proceedings, supply-chain execution (notably transformers), and affordability debates that could influence timing and allowed returns. The reaffirmed 52-year dividend-growth streak and premium peer valuation suggest that much of Fortis’ stability is already priced in, so expected total returns from current levels are likely to be driven mainly by the dividend yield plus mid-single-digit growth rather than multiple expansion. From a portfolio-construction standpoint, FTS remains best suited as a core defensive or bond-proxy holding for long-term investors seeking regulated North American utility exposure, rather than as a high-conviction growth or value opportunity. Upside to the investment case would come from easing equipment bottlenecks, favorable regulatory and permitting outcomes on key U.S. transmission and BC LNG/RNG projects, or a valuation pullback that improves the entry yield, while downside risks continue to center on adverse regulatory decisions, capital-market tightening, or material project delays and overruns.

Thesis delta

The new capital plan and extension of 4–6% annual dividend growth guidance through 2030 modestly increase confidence in the durability and visibility of Fortis’ mid-single-digit growth and income profile by quantifying a 7% rate base CAGR backed by largely low-risk projects. However, the confirmation of a premium valuation in the article reinforces our view that this stability is largely reflected in the current share price, keeping the risk-reward profile broadly neutral and consistent with a HOLD. Overall, the thesis tilts slightly more constructive on execution visibility and dividend durability but not enough to warrant a rating change or a shift away from viewing FTS as a core defensive holding rather than a conviction buy.