Fortis Inc. Reveals Ambitious $26 Billion Five-Year Capital Plan for Energy Transition and Growth Opportunities - InvestingPro Insights
ST. JOHN'S, Newfoundland and Labrador - Fortis Inc. (TSX/NYSE: FTS), a leading player in the North American regulated electric and gas utility sector, has announced a bold five-year capital plan. The company is set to invest $26 billion by 2029, marking a $1 billion increase from the previous forecast. The plan is designed to support a 6.5% average annual growth in rate base over the period.
The increased investment is primarily fueled by transmission projects at ITC and customer growth in Alberta. The capital plan includes substantial commitments to energy transition, with a focus on renewable energy integration, storage, and cleaner fuel solutions.
Fortis projects its rate base to grow from $38.8 billion in 2024 to $53 billion by 2029. The funding for the plan will mainly come from operational cash flow and regulated debt, with additional equity through a dividend reinvestment plan.
Additionally, Fortis has announced a 4.2% increase in its quarterly common share dividend, extending its streak of dividend growth for the 51st consecutive year. The company also foresees growth opportunities in the U.S., particularly in transmission grid expansion for cleaner energy and climate adaptation.
However, BofA Securities has reinstated coverage on Fortis shares with an Underperform rating, expressing concerns about growth prospects and balance sheet strength. The company is advocating for regulatory changes in Arizona to explore further growth opportunities.
InvestingPro Insights:
- Fortis Inc. is making headlines with its robust five-year capital plan, emphasizing growth and sustainability.
- With a market capitalization of 22.29 billion USD, Fortis is a significant player in the utility sector.
- Investors have noted the company's commitment to increasing shareholder value through consistent dividend growth and financial stability.
- Despite trading at a premium, Fortis is expected to be profitable this year, with low price volatility appealing to stability-seeking investors.
- The company's strategic investments in renewable energy and grid resiliency position it well for future growth within the energy landscape.
In conclusion, Fortis Inc.'s ambitious capital plan and strategic investments in energy transition highlight its commitment to growth and sustainability. Investors should consider the company's financial stability, dividend growth, and debt burden when evaluating its potential for long-term success in the evolving energy sector.