Fortis vs Canadian Utilities Which Should You Buy?

Fortis and Canadian Utilities are both prominent companies in the energy sector in Canada. Fortis focuses on the transmission and distribution of electricity and natural gas, while Canadian Utilities operates in electricity generation, transmission, and distribution. Both companies have stable revenues and strong dividends, making them attractive investments for income-seeking investors. However, Fortis has a larger market capitalization and a more diversified geographic footprint, while Canadian Utilities has a strong presence in Western Canada. Investors should consider the unique strengths and growth opportunities of each company before making a decision.

Fortis or Canadian Utilities?

When comparing Fortis and Canadian 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 Canadian 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 2.82%, while Canadian Utilities has a dividend yield of 4.82%. 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 48.44%. On the other hand, Canadian Utilities reports a 5-year dividend growth of 6.94% year and a payout ratio of 86.32%.

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 18.60 and Canadian Utilities's P/E ratio at 15.12. 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 1.34 while Canadian Utilities's P/B ratio is 1.34.

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 0.20%, while Canadian Utilities's is -0.13%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Fortis's ROE at 7.42% and Canadian Utilities's ROE at 8.87%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $43.80 for Fortis and $24.45 for Canadian Utilities. Over the past year, Fortis's prices ranged from $36.86 to $46.06, with a yearly change of 24.96%. Canadian Utilities's prices fluctuated between $21.30 and $31.73, with a yearly change of 48.97%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.