Canadian Utilities vs Fortis Which Offers More Value?

Canadian Utilities and Fortis are two of the largest energy companies in Canada, both known for their stable dividend yields and consistent growth over the years. Investors often compare these two stocks as they operate in similar industries and have a strong presence in the utility sector. Canadian Utilities is known for its diverse portfolio of energy assets, while Fortis boasts a strong track record of acquisitions and expansion. Both companies offer investors a reliable source of income and potential for long-term growth.

Canadian Utilities or Fortis?

When comparing Canadian Utilities and Fortis, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Canadian Utilities and Fortis.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Canadian Utilities has a dividend yield of 5.33%, while Fortis has a dividend yield of 2.89%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Canadian Utilities reports a 5-year dividend growth of 6.94% year and a payout ratio of 107.39%. On the other hand, Fortis reports a 5-year dividend growth of 4.81% year and a payout ratio of 48.41%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Canadian Utilities P/E ratio at 19.08 and Fortis's P/E ratio at 17.96. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Canadian Utilities P/B ratio is 1.39 while Fortis's P/B ratio is 1.33.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Canadian Utilities has seen a 5-year revenue growth of -0.13%, while Fortis's is 0.15%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Canadian Utilities's ROE at 7.21% and Fortis's ROE at 7.48%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $24.80 for Canadian Utilities and $42.16 for Fortis. Over the past year, Canadian Utilities's prices ranged from $21.30 to $31.73, with a yearly change of 48.97%. Fortis's prices fluctuated between $36.86 and $46.06, with a yearly change of 24.96%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.