Fortis vs Algonquin Power & Utilities Which Should You Buy?

Fortis and Algonquin Power & Utilities are two prominent companies in the energy sector that investors often consider for their portfolios. Fortis, a Canadian utility company, has a long history of providing reliable returns to shareholders through its diversified operations across North America. On the other hand, Algonquin Power & Utilities, also a Canadian company, has been gaining attention for its focus on renewable energy projects and sustainable growth initiatives. Both stocks offer investors exposure to the utilities sector but present different opportunities for growth and income potential.

Fortis or Algonquin Power & Utilities?

When comparing Fortis and Algonquin Power & Utilities, 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 Fortis and Algonquin Power & Utilities.

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. Fortis has a dividend yield of 2.89%, while Algonquin Power & Utilities has a dividend yield of 9.27%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Fortis reports a 5-year dividend growth of 4.81% year and a payout ratio of 48.41%. On the other hand, Algonquin Power & Utilities reports a 5-year dividend growth of 0.00% year and a payout ratio of -94.44%.

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 Fortis P/E ratio at 17.98 and Algonquin Power & Utilities's P/E ratio at -52.94. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Fortis P/B ratio is 1.33 while Algonquin Power & Utilities's P/B ratio is 3.58.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Fortis has seen a 5-year revenue growth of 0.15%, while Algonquin Power & Utilities's is 0.17%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Fortis's ROE at 7.48% and Algonquin Power & Utilities's ROE at -6.59%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $42.16 for Fortis and $25.25 for Algonquin Power & Utilities. Over the past year, Fortis's prices ranged from $36.86 to $46.06, with a yearly change of 24.96%. Algonquin Power & Utilities's prices fluctuated between $23.93 and $26.50, with a yearly change of 10.74%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.