Seven Companies Rewarding Shareholders With a Raise

I am a long-term dividend growth investor. I buy companies with a long streak of annual dividend increases, at the right valuation, and I hold them for as long as they do not cut dividends. I am a very patient buy and hold investor. My goal has always been to achieve a certain level of target dividend income. I invest with the end goal in mind, which is to generate that income to pay bills in retirement, and have it grow above the rate of inflation.

I have discussed before the process I follow to come up with investment ideas. One of the ways I come up with ideas is during my monitoring process. Every week, I compile the list of dividend increases, and focus on those companies with at least a ten year history of annual dividend increases. I want to focus on companies that have managed to raise their dividends through the ups and downs of an economic cycle. This gives me a better feel that these dividends are coming from a sustainable business model, not a company that simply got lucky. I want dividends I can count on, whether we have a recession or a boom.

My monitoring process around dividend increases helps me to see how existing portfolio holdings are doing. It also helps me identify new ideas for further research.

In general, I look at the dividend increase, and compare it to the rate of dividend growth during the past five or ten years. It is helpful to see how sticky the dividend growth rate really is.

Next, I look at trends in earnings per share, in order to determine if the dividend is on solid ground. Without growth in earnings per share, there is a natural limit to future dividend increases. This step is best done when I review trends in the payout ratio as well.

I also look at valuation, but I will have to tell you that valuation is more art than science. You have to look at trends in earnings and dividends, along with the valuation metrics such as P/E ratio and dividend yield. You also have to determine if those trends could last.

During the past week, there were several companies that met the criteria as discussed above. The one exception is Amgen ( 9 year streak of dividend increases). The companies include:

Waste Management, Inc. (WM) provides waste management environmental services to residential, commercial, industrial, and municipal customers in North America.

The company increased its quarterly dividend by 5.50% to 57.50 cents/share. This is the 19th consecutive year of annual dividend increases for this dividend achiever. Over the past decade, it has managed to grow dividends at an annualized rate of 5.90%.

The company managed to grow earnings from $2.01/share in 2009 to $3.91/share in 2019. Waste management is expected to earn $4/share in 2020.

The stock is selling for 29 times forward earnings and yields 1.95%.

Franklin Resources, Inc. (BEN) is a publicly owned asset management holding company. The firm invests in the public equity, fixed income, and alternative markets.

The company raised its quarterly dividend by 3.70% to 28 cents/share. This marked the 41st consecutive annual dividend increase for this dividend champion. The company has managed to grow distributions at an annualized rate of 14% during the past decade. The rate of dividend growth will be slowing down in the future, due to lack of EPS growth.

Between 2009 and 2019, Amgen managed to grow earnings from $4.51/share to $12.88/share.

The company is expected to generate $2.74/share in 2021.

The stock is selling for 9.12 times forward earnings and yields 4.50%.

Amgen Inc. (AMGN) discovers, develops, manufactures, and delivers human therapeutics worldwide. It focuses on inflammation, oncology/hematology, bone health, cardiovascular disease, nephrology and neuroscience areas.

The company raised its quarterly dividend by 10% to $1.76/share. This marked the 9th year of consecutive annual dividend increases for this future dividend achiever.  Over the past five years Amgen has managed to increase distributions at an annualized rate of 18.90%.

Amgen is expected to earn $16.17/share in 2020.

The stock is selling for 14.30 times forward earnings and yields 3.05%.

The Ensign Group, Inc. (ENSG) provides health care services in the post-acute care continuum and other ancillary businesses.

The company raised its quarterly dividend by 5% to 5.25 cents/share. This was the 12th consecutive annual dividend increase for this dividend achiever. Over the past decade, it has managed to grow dividends at an annualized rate of 14.10%.

Ensign Group earned $0.78/share in 2009, and managed to grow it to $1.97/share by 209.

The company is expected to earn $3.11/share in 2020

The stock is selling for 24.50 times forward earnings and yields 0.27%.

ABM Industries Incorporated (ABM) provides integrated facility solutions in the United States and internationally. The company operates through Business & Industry, Technology & Manufacturing, Education, Aviation, and Technical Solutions segments.

ABM Industries raised its quarterly dividend by 2.70% to 19 cents/share. This marked the 54th year of consecutive annual dividend increases for this dividend king. It has managed to increase dividends at an annualized rate of 3.30% over the past decade.

ABM Industries is expected to earn $2.34/share in 2021. Earnings per share have been largely flat for a long period of time.

The stock is selling for 17.05 times forward earnings and yields 1.90%.

Balchem Corporation (BCPC) develops, manufactures, and markets specialty performance ingredients and products for the food, nutritional, feed, pharmaceutical, medical sterilization, and industrial markets in the United States and internationally.

The company raised quarterly dividends by 11.50% to 58 cents/share. In the past decade, the company has managed to increase dividends at an annualized rate of 20.40%.

Ted Harris, Balchem’s CEO and President, said, “Balchem has a long-standing commitment to an annual dividend and we are pleased to announce the continuation of that commitment. This dividend represents the eleventh consecutive increase in our annual dividend, reflecting both the consistently outstanding financial performance the company has delivered and the Board’s continued confidence in our long-term strategies.”

Between 2009 and 2019, earnings grew from 93 cents/share to $2.45/share.

Balchem is expected to generate $3.30/share in 2020

The stock is selling at 34.30 times forward earnings and yields 0.50%.

Washington Trust Bancorp, Inc. (WASH) operates as the bank holding company for The Washington Trust Company, of Westerly that offers various financial services to individuals and businesses. The company operates in two segments, Commercial Banking and Wealth Management Services.

The company raised its quarterly dividend by 2% to 52 cents/share. This marked the tenth consecutive annual dividend increase for this dividend achiever. The bank managed to grow dividends at an annualized rate of 8.80% during the past decade. It also did not cut dividends during the financial crisis, but just kept them unchanged.

Between 2009 and 2019, earnings grew from $1/share to $3.96/share. Before the financial crisis, the company earned $1.82/share in 2006.

The bank is expected to earn $3.92/share in 2020.

The stock is selling for 11.50 times forward earnings and yields 4.60%.

Relevant Articles:

- Fourteen Companies Spreading Holiday Cheers To Shareholders

- Ten companies delivering value to their shareholders

- Six Companies Rewarding Their Thankful Shareholders With a Raise

- Eleven Dividend Growth Stocks That Grew Dividends Last Week

Charlie Munger Interview at Caltech

I am a big fan of Warren Buffett and Charlie Munger. The investing duo has managed to transform Berkshire Hathaway from a failing textile mill to a sprawling conglomerate worth over $500 billion.

Whenever I have a chance, I always try to listen to new interviews with Warren or Charlie. I recently listened to an interview with Charlie Munger at Caltech, and wanted to share it with you:

I was able to obtain a transcript of the interview from here, although it is very rough. You can download it from here.  A much better transcript is now available here.

Reader Investing Mindset tipped me that the Video is uploaded early. 

While the interviewer could have asked some better questions, I still enjoyed watching Charlie Munger live. This is a screenshot I took during the live version on Monday, December 14th.

You can see that even at 96, he is still very sharp. It is also fascinating to see the Value Line investment manual on his left side. He is still searching for good companies to invest in, which is amazing.

Value Line offers a free stock analysis of the 30 companies in the Dow Jones Industrials average. It is a neat service to use.

There are a few great quotes, transcribed by Tren Griffin.

2/ “All successful investment involves trying to get into something where it's worth more than you're paying. That's what successful investment is. There are a lot of different ways to find something worth more than you're paying. You can do what Sequoia does [e.g, in VC]."

— Tren Griffin (@trengriffin) December 15, 2020

“All successful investment involves trying to get into something where it's worth more than you're paying. That's what successful investment is. There are a lot of different ways to find something worth more than you're paying. You can do what Sequoia does [e.g, in VC]."

“Good investing requires a weird combination of patience and aggression and not many people have it. It also requires a big amount of self-awareness about how much you know and how much you don't know. You have to know the edge of your own competency.

"A lot of brilliant people are no good knowing the edge of their own competency. They think they're way smarter than they are. Of course, that's dangerous and causes trouble.”

“When I was young, there was practically nobody involved in investing and they weren't very smart. Now almost everybody's smart. A good proportion of the people in investing are sucked into finance by the money. That's an important development. I don't welcome it at all."

"I don't think we want the whole world trying to get rich by outsmarting the rest of the world. But that's what's happened. There's been frenzies of speculation and so on.  It's been very interesting, but it's not been all good.”

You find out whether you got the qualities to win at poker by playing poker. It helps to know the math and Pascal, but everybody with any sense knows that. Having a temperament where math and Pascal is almost as much a part of you as your ear and nose, is hard to teach.”

“In the early days we found some people instantly converted to our way of investing and did very well. Some people, no matter how carefully we explained it and no matter how successful they were otherwise could never learn that. Either they got it fast or didn't get it at all”

“A lot of people think they're way smarter than they are and they do worse than dumb people. It's very common to be utterly brilliant and think you're way the hell smarter than you are.

To succeed, start early, try hard, and keep doing it. All success comes that way."

“All the things that were really great when I were young have receded enormously. New things have come up and some of them have started to die. That is what the long-term investment climate is, which does make it very interesting."

"Look at what's died: department stores, newspapers, steel, John D Rockefeller's Standard Oil is a pale shadow of what it was. It is just like biology. They have their little hour, they have their little time and then they get clobbered.”

“Everybody uses new technology, but it really helps to have a position that almost can't be taken away by technology. You can hardly think of a more old-fashioned business than a railroad business. But who in hell is ever going to create another trunk railroad?"

"Burlington Northern is a very good asset for us, so, and we made that success, not by concrete change, but by avoiding it. Burlington Northern has been quite clever at adapting technology to their railroad."

"Imagine the good luck of being able to take an existing railroad and double-deck all the trains, and raise the heights of the tunnels a little, and so forth. All of a sudden you've got twice the capacity at very little incremental cost, which is what that railroad has done."

''A friend send me a blue blazer made in China, bought on the Chinese internet, and it cost $42 delivered. It may not have been a perfect blazer, but it was an amazing blazer for $42. The person who created that blazer gave some little factory an order for 100,000 at once."

"They were pre-sold. It's the most extreme kind of "kill all our competitors" type of selling I've ever seen. How good is it for Brooks Brothers when somebody can deliver a blazer through the internet from China for $42? It didn't look like that bad a blazer to me either.”

“I spent a lifetime trying to avoid my own mental biases. A) I rubbed my own nose in my own mistakes. B) I try and keep it simple and fundamental as much as I can. I like the engineering concept of a margin of safety. I'm a very blocking and tackling kind of a thinker."

"I just try and avoid being stupid. I have a way of handling a lot of problems. I put them on what I call my 'too-hard pile.' Then I just leave them there. I'm not trying to succeed in my too-hard pile. I sometimes get things that are too hard and when that happens, I fail."

"The single most important thing, if you want to avoid a lot of stupid errors, is knowing where you're competent and where you aren't. That's very hard to do, because the human mind naturally tries to make you think you're way smarter than you are.” 

“Early innovation by Giannini's Bank of America helped immigrants by giving them loans. He kind of knew which ones were good for it and which ones weren't. I think that was all for the good. That brought banking to a lot of people who deserved it."

"Bank of America helped the economy and helped everybody. Once banking got so they wanted to have soft hands and make zillions as speculators, those developments haven't been a plus. In other words, I like banking when they're trying to avoid losses prudently.”

“Some European government borrowed money recently for some tiny little fraction of 1% for a hundred years. Now, that is weird. What kind of lunatic would loan money to a European government for a hundred years at less than 1%?”

 “In my lifetime, advanced civilization has gotten ahead faster than any century that existed before. Nothing else was even close. It's utterly without precedent in real terms."

"It's unbelievable, I watched the whole damn thing quite literally because I've lived so long. It's been absolutely astounding.”

“Just think of how hard it is to get far ahead in life. Imagine, first you want to get ahead at Caltech. If you're very brilliant and work 80 or 90 hours a week for 9 or 10 years, you get tenure. That is not what I call an easy life and competing with the Homer Joe Stewarts.

I chose to avoid [academia as a career] because I knew I wouldn't win big at it. I would have been a perfectly successful professor by ordinary standards, but I would not have been a star.

"I'm a big fan of knowing the big ideas in pretty much all of the disciplines, the ones that are pretty easy to assimilate, and then using those routinely in your judgments. That's just my system. I don't believe in just constantly consulting with experts."

"I might consult experts in building a chemical plant or something. But in making investment decisions it's very helpful to be comfortable with the big ideas in all the disciplines. I think that life's more fun if you do that." 

"Academia is not very good at the interdisciplinary stuff. Academia rewards a researcher who knows more and more about less and less, and there are real difficulties with that approach.

"It's harder to be that smart in the liberal arts, partly because many liberal arts professors are so leftist. It's hard to be pretty smart if you're crazy leftist. You're going to have the world a lot wrong.”

"What helps everyone is to get in something that's going up and it just carries you along without much talent or work. If you pick a really strong place, like say Costco, and you go to work at it, and you really are reliable and nice, you're going to do fine in life."

"Nobody wants to go to work for Costco after graduating from Harvard, or MIT, or Stanford. Of course, it's the one place where it would be easiest to get ahead. You would have a big tailwind."

“I'm proudest of avoiding some things I don't like. I don't like irrationality, and I've worked to try and avoid it in my life. I haven't succeeded completely of course. Nobody does. It's been a pleasant way of going through life." 

Let Your Dividends Pay Your Phone Bills

I recently stumbled upon the 1923 annual report for AT&T, or the old Ma Bell. It was provided by Brian Nelson from Valuentum. AT&T owned the telephone monopoly in the US until 1983, when it was broken up. 

The 1923 annual report introduced a novel idea - "Let Your Dividends Pay Your Phone Bills". The idea was for customers to acquire stock in AT&T, which paid generous dividends, and use those dividends to pay their phone bills. This is a fascinating idea, and it looks like something a dividend growth investor would say today. In fact, we've had a few posts that shared this idea in more detail - Paying Your Phone Bill with AT&T Dividend Income.

It also seemed like investors could buy AT&T stock on an installment plan, and pay a 6% annualized interest rate in the process. Given that the yield was higher than the interest rate, the investor probably came out ahead. It also looks like dividends were not taxable under the current Federal Tax laws at the time. 

Ultimately, the only large pieces left are AT&T (T) and Verizon (VZ). The current AT&T is actually one of the spin-offs from 1983, whose name was originally SBC. In a strange twist of events, the SBC acquired the old AT&T in 2005, and took over its name.

That new AT&T had managed to increase dividends every single year since its spin-off in 1983. Unfortunately, last week management decided to keep dividends unchanged at 52 cents/share. 

The company stated the following in its press release (source):

The company expects to have the financial flexibility in 2021 to continue to invest in growth areas, sustain the dividend at current levels and focus on debt reduction.

It seems to me that they won't be raising the dividend for the foreseeable future. This means that the dividend streak is in danger if they fail to raise the dividend by the end of 2021. Of course, the real danger is that a dividend freeze could be the first step before a dividend cut. Just for reference, AT&T has a 36 year streak of annual dividend increases, and is a member of the dividend aristocrats and dividend champions. Verizon on the other hand has a 14 year streak of annual dividend increases, the last one being in September 2020.

It seems that the acquisitions of DirecTV and Time Warner did not work out as expected, as the value of these assets has declined. The debt associated with these acquisitions is still there however, and it needs to be repaid. It looks like this is the priority for management right now. I am of course being too generous about these two acquisitions. They essentially lit tens of billions of dollars in shareholder wealth on fire. 

What is your opinion on AT&T today? Are you buying more, holding, or planning to sell - please share your input in the comments below.

Relevant Articles:

- Paying Your Phone Bill with AT&T Dividend Income

- Verizon hikes dividends for 14th consecutive year

- Should I invest in AT&T and Verizon for high dividend income?

- How to get dividend investment ideas

Fourteen Companies Spreading Holiday Cheers To Shareholders

As part of my review process, I evaluate dividend increases every week. This process helps me to see how my portfolio holdings are doing. It also helps me to uncover and review new candidates for my portfolio.

I look for dependable dividends from companies with a minimum ten-year streak of annual dividend increases, fueled by earnings growth. I look for dependable dividends from companies with dependable earnings, and solid competitive advantages, which I can acquire at attractive valuations.

During the past week, the following companies increased dividends to shareholders. Each company has a ten year streak of annual dividend increases. I review the latest dividend increase relative to the ten year average, and the growth in earnings per share over the past decade. Last but not least, I discuss current valuation. The companies include:

Bristol-Myers Squibb Company (BMY) discovers, develops, licenses, manufactures, and markets biopharmaceutical products worldwide. It offers products in hematology, oncology, cardiovascular, and immunology therapeutic classes.

Bristol Myers Squibb increased its quarterly dividend by 8.90% to 49 cents/share. This marks the twelfth consecutive fiscal year that Bristol Myers Squibb increased its dividend payouts. Over the past decade, this dividend achiever has managed to grow dividends at an annualized rate of 2.80%. I am glad to see it starting to kickstart earnings and dividend growth.

The company is expected to earn $6.38/share in 2020.

The stock is selling for 9.50 times forward earnings and yields 3.23%. Check my analysis of Bristol-Myers Squibb for more information about the company.

Abbott Laboratories (ABT) discovers, develops, manufactures, and sells health care products worldwide.

Abbott raised its quarterly dividend by 25% to 45 cents/share. Abbott has increased its dividend payout for 49 consecutive years and is a member of the S&P 500 Dividend Aristocrats Index. The company has managed to increase dividends at an annualized rate of 7.80% over the past five years.

The company is expected to generate $3.55/share in 2020

Abbott stock is selling for 30.10 times forward earnings and yields 1.68%.

Pfizer Inc. (PFE) develops, manufactures, and sells healthcare products worldwide. 

Pfizer increased its quarterly dividend by 2.60% to 39 cents/share. That marked the tenth year of consecutive annual dividend increases for the company. Over the past decade, Pfizer has managed to increase distributions at an annualized rate of 6.10%.

The company is expected to earn $2.84/share in 2020.

The stock is selling for 14.25 times forward earnings and yields 3.80%.

Mastercard Incorporated (MA), a technology company, provides transaction processing and other payment-related products and services in the United States and internationally. 

Mastercard hiked its quarterly dividend by 10% to 44 cents/share. Mastercard has managed to increase dividends at an annualized rate of 36.20% over the past decade.

The company is expected to earn $6.36/share.

The stock sells at 51.50 times forward earnings and yields 0.54%.

Casey's General Stores, Inc. (CASY) operates convenience stores under the Casey's and Casey's General Store names.

Casey’s General Stores raised its quarterly dividend by 6.30% to 34 cents/share. That’s the 21st consecutive annual dividend increase for this dividend achiever. During the past decade, the company has managed to increase distributions at an annualized rate of 14.30%.

The company is expected to earn $8.32/share in 2021.

The stock sells for 21.68 times forward earnings and yields 0.78%.

W. P. Carey Inc. (WPC) is an independent equity real estate investment trust. The firm also provides long-term sale-leaseback and build-to-suit financing for companies. It invests in the real estate markets across the globe. The firm primarily invests in commercial properties that are generally triple-net leased to single corporate tenants including office, warehouse, industrial, logistics, retail, hotel, R&D, and self-storage properties.

W.P. Carey raised its quarterly dividend by 0.20% to 1.046/share. This is an 0.80% increase over the dividends from the same time last year. Annualized dividend growth has been slowing down over the past one, three and five years.

The REIT sells for 14.50 times forward FFO and yields 6.10%. Check my analysis of W.P. Carey for more information on this dividend achiever.

SEI Investments Company (SEIC) is a publicly owned asset management holding company.

SEI Investments increased semi-annual dividends by 5.70% to declares $0.37/share. This marked the 30th consecutive annual dividend increase for this dividend champion. Over the past decade, the company managed to increase dividends at an annualized rate of 15.20%.

The company is expected to earn $2.91/share in 2020.

The stock is selling for 19.22 times forward earnings and offers a dividend yield of 1.31%.

Erie Indemnity Company operates as a managing attorney-in-fact for the subscribers at the Erie Insurance Exchange in the United States.

ERIE Indemnity (ERIE) raised its quarterly dividend by 7.30% to $1.035/share.  This marked the 31st year of annual dividend increases for this dividend champion. Over the past decade, the company managed to increase dividends at an annualized rate of 7.20%.

The company is expected to earn $5.67/share in 2020.

The stock sells for 42.27 times forward earnings and yields 1.77%.

Pentair plc (PNR) provides various smart water solutions worldwide. It operates through three segments: Aquatic Systems, Filtration Solutions, and Flow Technologies.

Pentair raised its quarterly dividend by 5.30% to 20 cents/share. 2021 will mark the 45th consecutive year that Pentair has increased its dividend.

The company is expected to earn $2.43/share in 2020.

The stock sells for 21.14 times forward earnings nad yields 1.55%.

CubeSmart (CUBE) is a self-administered and self-managed real estate investment trust. The Company's self-storage properties are designed to offer affordable, easily accessible and secure storage space for residential and commercial customers.

CubeSmart raised its quarterly dividend by 3% to 34 cents/share. This is the 11th consecutive year of dividend increases for this dividend achiever. During the past decade, it has managed to grow dividends at an annualized rate of 29%.

The stock sells for 19.77 times forward FFO and yields 4.13%.

Mid America Apartment Communities (MAA), an S&P 500 company, is a real estate investment trust, or REIT, focused on delivering full-cycle and superior investment performance for shareholders through the ownership, management, acquisition, development and redevelopment of quality apartment communities in the Southeast, Southwest, and Mid-Atlantic regions of the United States.

Mid America Apartment Communities raised its quarterly dividends by 2.50% to $1.025/share. The REIT is a dividend achiever with 10 years of annual dividend increases under its belt. Over the past decade, it has managed to increase dividends at an annualized rate of 4.60%.

The stock sells at 19.28 times forward FFO and yields 3.37%.

Alexandria Real Estate Equities, Inc. (ARE) is a real estate investment trust that invests in office buildings and laboratories leased to tenants in the life science and technology industries.

Alexandria Real Estate Equities raised its quarterly dividends by 2.80% to $1.09/share. This is the second increase this year, bringing the new distribution to be 5.80% higher than the dividend paid during the same time last year. During the past decade, this REIT has managed to increase distributions at an annualized rate of 5.50%.

The stock is selling for 23.60 times forward FFO and yields 2.53%.

Norwood Financial Corp. (NWFL) operates as the bank holding company for Wayne Bank that provides various banking products and services.

Norwood Financial raised its quarterly dividend by 4% to 26 cents/share.  This marks the twenty-ninth consecutive year of dividend increases for the Company. Over the past decade, the company has managed to increase dividends at an annualized rate of 3.90%.

The stock sells for 13.87 times forward earnings and yields 3.85%.

Trinity Industries, Inc. (TRN) provides rail transportation products and services in North America. It operates through three segments: Railcar Leasing and Management Services Group, Rail Products Group, and All Other.

Trinity raised its quarterly dividend by 10.50% to 21 cents/share. This marked the 11th consecutive annual dividend increase for this dividend achiever. During the past decade, the company managed to grow distributions at an annualized rate of 14.90%.

The company is expected to earn 42 cents/share in 2020. 

The stock yields 3.25% and sells for a forward P/E of 62. 

Relevant Articles:

- Ten companies delivering value to their shareholders

- Nine Cash Machines Hiking Dividends Last Week

- Eleven Dividend Growth Stocks That Grew Dividends Last Week

- Busiest Week for Dividend Increases Since February

Fortis (FTS) Dividend Stock Analysis

Fortis Inc. (FTS) operates as an electric and gas utility company in Canada, the United States, and the Caribbean countries. 

Fortis has managed to increase dividends for 47 years in a row. The last dividend increase was in September 2020, when this utility raised its quarterly dividend by 5.90% to 50.50 cents/share.  Over the past decade, Fortis has managed to grow dividends at an annualized rate of 5.80%. In addition, the Corporation has extended its targeted average annual dividend per common share growth of approximately 6% to 2025 based on a 2020 annualized dividend of $1.91. Just for reference, the stock data is listed in Canadian Dollars, not US dollars.

An interesting fact is that Fortis will offer a 2% discount on common share issuances under its dividend reinvestment plan. I am not sure if this works with your regular vanilla brokerage account, but I am eager to find out.

Between 2009 and 2019, Fortis has managed to grow earnings from $1.51/share to $2.67/share. The company is expected to generate $2.58/share in 2020.

Fortis has 2 million electric and 1.3 million gas customers in the US, Canada and the Caribbean. Fortis has been able to grow through acquisitions as well as deploying more money into its capital base. A large portion of acquisitions were paid by stock. Future growth could definitely come from future acquisitions. 

Another avenue of growth is by deploying cash in its existing base, and earning an approved rate of return. As a regulated utility, its rates of return are based on regulators. Therefore, the more investment it can get into the system, the more profits can be generated at a given rate of return. Regulators can be tricky, because they may take time to approve rate increases, which may eat into approved rates of return and reduce profitability. Growth in customers and rate base should aid profits, along with rate increases. Fortis has exposure to different state and province regulators in the US and Canada, which is a good level of diversification. 

The capital investment plan is expected to be primarily funded with cash from operations (61%), debt raised at the utilities (33%) and common equity from the Corporation's dividend reinvestment plan (6%). 

Consolidated rate base is projected to increase from $30.2 billion in 2020 to $36.4 billion in 2023 and $40.3 billion in 2025, translating into three and five-year compound annual growth rates of 6.5% and 6.0%, respectively. 

The five-year capital plan includes investments of $5.1 billion at ITC for electric transmission infrastructure to expand system capacity, improve reliability through system upgrades and provide customers access to more cost-effective renewable energy. 

At FortisBC, the company expects to invest $4.4 billion in natural gas and electric infrastructure including investments to improve gas line safety and integrity, new natural gas storage to improve resiliency and infrastructure to serve customer-owned LNG export facilities. 

At UNS Energy in Arizona, the company expects to invest $3.8 billion in transmission, distribution and generation infrastructure to support a cleaner energy future. 

Fortis has been able to grow through acquisitions. A large part of these acquisitions were paid for by issuing stock. As a result, the number of shares outstanding has increased from 174 million in 2009 to 438 million in 2019.

The company has managed to maintain a generally stable level in its dividend payout ratio over the past decade. Long-term growth in earnings and dividends that match should keep the payout ratio within a tight band.

The stock trades at 20.60 times forward earnings and yields 3.85%.

US investors may want to consider holding those shares in a tax-deferred account. Canadian dividends face a 15% withholding in taxable accounts for US residents. However, there is no withholding tax in retirement accounts such as Roth IRA's.

Relevant Articles:

- Dividend Growth Investing My Way To Financial Freedom

- Why I Use Dividend Growth Investing to Get Wealthy

- Where to find international dividend paying stocks?

- A Costly Misconception about foreign dividend stocks