Fortis Reports Q3 Growth and Strengthens Long-Term Outlook

• Fortis posted a solid Q3 with net earnings of $420 million, or $0.85 per share, a year-over-year increase attributed to rate base growth and improved earnings at Tucson Electric Power.
• The company reaffirmed its commitment to growth, releasing a $26 billion capital plan for 2025-2029, focused on renewable expansion and transmission resiliency.
• Fortis raised its dividend by 4.2%, marking 51 consecutive years of dividend increases.

Third-Quarter Financial Highlights

Fortis (TSX:FTS)(NYSE:FTS) reported third-quarter net earnings of $420 million, or $0.85 per share, up from $394 million or $0.81 per share in the same period last year. This improvement reflects regulated rate base growth across its portfolio and favorable earnings adjustments at Tucson Electric Power (TEP) due to new rates effective since September. On a year-to-date basis, Fortis achieved net earnings of $1.2 billion, up $85 million from 2023, benefiting from regulated rate growth and derivative gains.

Capital expenditures reached $3.6 billion through September, with the company raising its full-year investment target to $5.2 billion, up from $4.8 billion. This increase was driven by the Eagle Mountain Pipeline project and exchange rate factors impacting U.S. investments.

$26 Billion Five-Year Capital Plan

Fortis announced a $26 billion capital plan for 2025-2029, representing a 6.5% average annual rate base growth. This strategic investment will advance several critical projects, including TEP’s Roadrunner Reserve 2, a 200-megawatt energy storage facility scheduled for 2026 completion. Significant investments will also flow into the Midcontinent Independent System Operator (MISO) long-range transmission plan (LRTP), where Fortis anticipates $3 billion in investments in key regions such as Michigan and Minnesota.

This five-year plan emphasizes sustainable growth and grid resilience, with 97% of investments directed at regulated assets, ensuring a low-risk, stable return profile. Beyond this timeframe, Fortis expects further growth through grid modernization, renewable gas solutions, and potential expansions in clean energy infrastructure across its service territories.

Dividend Increase and Shareholder Focus

Demonstrating a long-standing commitment to shareholder returns, Fortis raised its quarterly dividend by 4.2%, extending its record to 51 consecutive years of increases. The company aims to sustain annual dividend growth of 4-6% through 2029, aligning with its capital plan and steady cash flow from regulated utilities.

Regulatory Developments

Fortis navigated several regulatory changes this quarter, including rate adjustments and refund directives from the Federal Energy Regulatory Commission (FERC), affecting ITC’s return on equity. While Fortis anticipates a $22 million after-tax earnings impact in Q4, the company maintains regulatory compliance as a core element of its operational stability.

Investor Outlook

Fortis’s stable growth trajectory, anchored by a diversified portfolio and extensive regulated assets, makes it a strong option for income-focused investors. The consistent dividend growth and ambitious capital plan targeting green infrastructure support Fortis as an attractive, low-risk investment, especially suited to those seeking long-term, reliable dividends. Since the start of the year, Fortis stock has risen by 11%.