Written by Demetris Afxentiou at The Motley Fool Canada
Finding that perfect mix of investments early on can make a huge difference in generating a handsome income stream in retirement. Fortunately, the market gives us plenty of options to consider, including what is one of the best stocks to buy in September 2023.
Here’s the stock you need now
Every portfolio needs one or more defensive stocks. These are stocks that can offset the market volatility that does occur from time to time. Fortis (TSX:FTS) is one such stock that investors should consider a buy in September 2023.
For those that are unfamiliar with the stock, Fortis is one of the largest utilities in North America. Fortis operates across 10 operating regions in Canada, the US, and the Caribbean. The overwhelming majority of Fortis’ revenue stems from regulated revenue streams that include both electric and gas segments. The company also boasts an impressive 3.4 million utility customers across both those segments.
In short, long-term contracts guarantee stable and recurring revenue for as long as Fortis continues to provide service. Those contracts typically span a decade or more in duration, which helps to make Fortis one of the most defensive stocks on the market.
But that’s not all.
Utility stocks like Fortis are often stereotyped as being boring investments. The view is that these utility stocks lack the ability, or even the incentive to invest in growth.
In the case of Fortis, this couldn’t be further from the truth. Fortis has taken an aggressive stance towards growth and has completed increasingly larger acquisition targets over the years. This has proven to be a key strategy behind Fortis’ exceptional growth in the past decade and making the company the $64 billion behemoth it is.
That being said, in recent years Fortis has shifted that growth to upgrading and transitioning its existing facilities. The company has allocated billions towards a capital improvement program that also includes transitioning over to renewables.
Is Fortis a buy in September 2023 for your portfolio?
One of the main reasons why investors continue to flock to Fortis is for its juicy quarterly dividend. As of the time of writing, the dividend works out to a yield of 4.21%, making it a respectable option to consider in a volatile market.
Further to this, Fortis has an impeccable record of providing annual upticks to that dividend. The company has provided investors with 49 consecutive years of increases and is on track to hit 50 years.
When Fortis does hit that half-century mark (expected later this year), it will be only the Second Dividend king in Canada. That’s yet another reason to consider Fortis as a buy in September 2023.
Another key point that prospective investors should consider is that reinvesting those dividends until needed can provide steady growth to your portfolio. This makes Fortis an ideal buy-and-forget candidate for nearly any portfolio.
In terms of results, Fortis reported results for the second quarter of the fiscal year in early August. In that quarter, Fortis reported earnings of $294 million, or $0.61 per common share. This represents an increase over the $284 million, or $0.59 per common share, reported in the same period last year.
One final reason to consider Fortis as a buy in September 2023 is the current stock price. As of the time of writing, the stock is down over 9% in the trailing 12-month period. Considering the stable revenue and juicy dividend, this makes Fortis a must-have for any investor.
In my opinion, Fortis should be a core holding of any well-diversified portfolio. Buy it, hold it, and watch it grow.
Before you consider Fortis, you'll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in August 2023... and Fortis wasn't on the list.
The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 26 percentage points. And right now, they think there are 5 stocks that are better buys.
See the 5 Stocks * Returns as of 8/16/23