Portfolio Update
The FiveTwenty portfolio received $211.68 in dividends in the past week. AFL, BKH, ENB, FTS, SJM and SWX paid their quarterly dividend during the week.
| Past Week Dividend | $211.68 |
| Current Quarter Dividend (Q4 2021) | $728.64 |
| LifeTime Dividend | $1,829.97 |
| Estimated Annual Dividend | $3,596.12 |
The capital allocation for the week of 12/05/2021 to 12/11/2021 will be used to add to our position in Fortis (NYSE: FTS)
FTS – Position Update
Since our last check-in on FTS in week 24 of 2021, the company reported Q2 2021 earnings on 07/29/2021 and Q3 2021 earnings on 10/29/2021. Additionally, the share price stayed pretty much flats decreasing minimally from C$56.47 to C$56.31 during the same period.
| TTM | Prev. Update | 10-year median | |
| Dividend Streak | 48 years | 47 years | |
| Yield | 3.64% | 3.53% | 3.57% |
| Payout Ratio | 77.36%1 | 74.63%2 | NA |
| P/E | 21.251 | 21.152 | NA |
1 computed using TTM adjusted EPS of C$2.65 as of Q3 2021
2 computed using TTM adjusted EPS of C$2.67 as of Q1 2021
Q3 2021 earnings report
Did FTS’s latest earnings report raise any warning flags?
In Q3 2021, FTS grew revenue, and saw a slight decrease in adjusted net earning and adjusted EPS compare to the same period a year ago. Revenue and earnings in the quarter benefited from Rate Base growth, higher flow-through costs in customer rates, higher electricity sales in Western Canada and Caribbean, and new customer rates at TEP. On the other hand, revenues and earnings were adversely impacted by lower currency exchange rates and cooler weather in Arizona that reduces electricity sales in the state. Overall, revenue grew 3.5%, adjusted net earnings decreased 0.66%, and adjusted EPS where 1.5% lower compared to Q3 2020.
| Revenue (in millions) | Adj. Net Income (in millions) | Adj. EPS . | |
| Q3 2020 | C$2,121 | C$302 | C$0.65 |
| Q3 2021 | C$2,196 | C$300 | C$0.64 |
| % Change | 3.5% | (0.66%) | (1.5%) |
Additional noteworthy developments during the quarter:
- FTS increased its quarterly dividend 6% to C$0.535 in September 2021. This represents the 48th consecutive year of dividend increases.
- As part of the Q3 2021 earnings announcement, the company introduced its new 5-year capital investment plan of $20 billion. The plan aims to increase rate base from $31.2 billion in 2021 to $41.6 billion by 2026.
Looking ahead, the company re-affirmed its 6% dividend growth guidance through 2025. FTS expects the dividend growth to be supported by the 6% CAGR in rate base over the next 5 years.
Thesis
Why are we adding to our position in FTS?
FTS continues to enjoy a solid financial performance in 2021. In addition, management continues to execute on their long term plans to grow earnings by expanding rate base.
With no negative surprises since our initial investment, we continue to believed that FTS is good source of growing dividends going forward.
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