FTS Long

The Big Idea

Fortis (NYSE: FTS) is a rock-solid utility powerhouse that’s setting up for a breakout. With 52 straight years of dividend increases and a $5.6+ billion capital spending program powering ~7% rate-base growth, Fortis combines steady cash flow with above-average growth. It’s exactly the kind of “boring” defensive stock that thrives when risk appetites waver. One analyst summed it up as an excellent utility with a history of good long-term results and management well prepared to weather the storm of higher rates.

In other words, the company has strong fundamentals and a recession-resistant record (it even held up through 2008–09), yet FTS trades at a modest P/E (~17x) on a ~4% yield – making it a cheap dividend stock relative to its quality. With the stock pulling back to its 20-day moving average near $55.4, we have a clear entry zone ($56.10–$56.80) and a defined line in the sand, sending us on cruise-control toward our $60.20 target.

What’s Changed / Why Now

The backdrop couldn’t be better for Fortis. Northward pressure on bond yields has paused (10-year Treasuries are back around ~4% after a recent slide), easing the headwind on utilities. Inflation is cooling, and the Fed is essentially on hold – normalizing rates without pushing them higher. That macro holiday is letting income stocks shine again.

At the same time, Fortis just reported very strong Q4/2025 results: net earnings of $1.7 billion ($3.40/sh) and adjusted EPS of $3.53 (up from $3.28) – proof that its growth engines are humming. Crucially, Fortis announced a record $28.8 billion five-year capital plan for 2026–2030 (up $2.8B), projecting ~7% annual rate-base growth and 4–6% annual dividend increases. In short, the company is cranking out growth under the hood.

Technically, FTS has been grinding higher (5Y +7%, 1Y +29%), then “tucked in” near $55 after the recent run. March is historically friendly for utilities, and Fortis has held up right at its 20-day SMA. We see this pullback as a base – classic trend-following action in a defensive business. Add a high short-to-float and hungry yield-minded funds, and you’ve got a recipe for a short squeeze up to new highs. Put simply, nothing fundamental has changed to undermine the bull case… but the setup did: price is now coiled. That’s how we know it’s time to act.

Catalysts Ahead

• Robust Earnings Momentum: Fortis delivered $1.7 billion net income in 2025 (EPS $3.40) and 7.6% adjusted EPS growth. Q4 results beat expectations and re-affirmed management’s confidence.
• Rising Dividends: Q4’s 4.1% dividend hike continues the 52-year streak; management expects 4–6% raises through 2030. Investors craving income are attracted to that predictability.
• Huge CapEx Program: The $28.8B five-year plan is massive – funding transmission upgrades, renewables, and customer growth. More assets on the grid means more future earnings.
• Regulatory Wins: Arizona regulators recently approved a 300 MW power deal in Tucson Electric territory and look set to authorize a solid 9.6% ROE on new rates. That’s concrete proof Fortis should earn roughly its cost (or more) on its investments, lifting cash flows.
• Defensive Flow: With markets jittery, money is moving into safe-haven utilities. Fortis’s dividend history (4%+ yield) and low beta make it a magnet for capital-preservation mandates.
• ESG & Climate Trends: Fortis is a leader in grid resiliency and clean energy (38% GHG cut by 2025; net-zero by 2050 goals). Investors allocating to green infrastructure should support the stock.

The Numbers That Matter

• 2025 Adjusted EPS: $3.53 vs $3.28 in 2024 (up ~7.6%).
• CapEx/Rate Base: $5.6B capex in 2025 drove embedded rate base to $42.4B (≈7% growth).
• 5-Year Plan: $28.8B capex (2026–30) – up $2.8B over prior plan – implying mid-year rate base of $57.9B by 2030 (~7% CAGR).
• Dividend Track: Q4 dividend +4.1% versus last year (52nd year of raises); long-term guidance for 4–6% increases.
• Valuation: ~17× EPS on a >4% yield. By comparison, major U.S. utilities trade mid-to-high teens despite slower growth – FTS is cheaper with more growth.
• Technicals: Stock ~$57 now, just ~1.1% below its 52-week high ($57.37). RSI ~66 (positive momentum, not yet overbought). Short-term volume confirms a healthy dip-buy correlation.

Technical / Price Action Context

This is a classic trend Pullback setup. Fortis has been in an uptrend for months, recently bumping into multi-year highs (~$57.37). Instead of a deep selloff, FTS “coiled” with a shallow decline to its 20-day moving avg (~$55.3), which is now acting like springboard support. That’s exactly where we want to be buying.

Our recommended entry zone is $56.10–$56.80, which lies just above the 20-day line, capturing strength while still giving room. We place the stop at $54.85, just below the recent pivot (and roughly the 50-day MA). If Fortis falls under $55 decisively, we’ll cut and reevaluate. However, as soon as it retakes the prior high, the path to $60.20 opens up. Note that $60.20 is only ~4% above today’s price – reachable within a week given FTS’s bullish posture. Overall, the chart signals a controlled pullback that never threatened the trend. A breakout to fresh highs now looks imminent.

Risks & What Could Go Wrong

• Rate-Sensitivity: Utilities are impacted by interest rates. If bond yields spike again (or the Fed signals new hikes), FTS multiples could get choppy. This is the biggest macro risk.
• Market Sentiment: A sudden broad risk-off (e.g., a tech crash or geopolitical shock) could give even defensive stocks a pause, stalling utilities briefly.
• Support Break: The key line is about $55. A drop below $55 (and our $54.85 stop) would break the recent pivot and invalidate this pullback, meaning the bullish pattern failed and we’d exit to limit loss.
• Company-Specific: Any big regulatory setback or unexpected outage could hurt performance. So far, management looks solid and regulators have been supportive.

Bottom Line

Fortis is the perfect defensive growth play right now. It offers steady dividends (4%+ yield and growing), investment-grade stability, and real growth catalyzed by a huge $28.8B capital plan. You get bond-like safety and equity upside. The stars are aligning: U.S./Canada yields have eased, markets are nervous enough to seek out utilities, and FTS’s pullback formed exactly at strong support. We’re comfortable being aggressive here.

With our $60.20 target just a few percent away, the potential reward (~6.9%) far exceeds the risk (~3.1% to stop). In TradeVae speak, that’s a high-probability setup with well-defined parameters. We like FTS at $56.1–$56.8 and will ride it through early March. If the pattern plays out, shareholders should be rewarded as Fortis reclaims its highs and charges toward $60+ before our horizon.