Fortis dividend: cash coverage and yield
Fortis paid C$2.51 per share in 2025, up from C$2.08 in 2021, while its free cash flow was negative in 2021 and 2022. Operations alone did not fund both construction and shareholder distributions, so Fortis relied on borrowing, asset sales and shareholder capital.
How much does Fortis pay its shareholders?
Revenue grew 5.8% in 2025 while operating margin was 28.7%; pass-through sales can rise without equal profit growth. Net debt rose from C$25,788 million in 2021 to C$34,267 million in 2025. The company’s own free cash flow was negative in 2021 and 2022. Dividends per share rose from C$2.08 in 2021 to C$2.51 in 2025. Diluted EPS rose from C$2.61 in 2021 to C$3.40 in 2025 as average diluted shares grew each year. Shares trade at 22.7x trailing P/E and 20.0x next-12-month P/E. The dividend yield is 3.3%, against a 0.0% buyback yield.
| 2025 | 2024 | 2023 | 2022 | 2021 | |
|---|---|---|---|---|---|
| − Dividends paid, per share | 1.56 | 1.50 | 1.44 | 1.41 | 1.29 |
| − Share buybacks, per share | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| = Paid out more than FCF, per share | 3.20 | 2.43 |
What this means. The company paid dividends and other cash even while its free cash flow was negative, so it paid out more than it generated.
Is Fortis’s dividend covered by its cash?
Free cash flow is the cash left after operating cash flow pays for capital spending. Fortis’s free cash flow was negative in 2021 and 2022, so operations alone did not fund both construction and shareholder distributions. Fortis therefore relied on borrowing, asset sales and shareholder capital. That does not prove the projects were poor; it means their cash returns arrived later than their construction bills.
Dividends added to the financing pressure. A dividend-reinvestment plan lets shareholders use dividends to buy new Fortis shares instead of taking cash. Fortis says its plan offers a 2% discount, so participating shareholders help keep money inside the company while increasing the number of shares that will share future profits. Buybacks were zero in every year, which meant Fortis did not use cash to reduce its share count.
| 2025 | 2024 | 2023 | 2022 | 2021 | |
|---|---|---|---|---|---|
| Free cash flow | -792 | -481 | |||
| − Dividends paid | 788 | 744 | 701 | 673 | 608 |
| − Share buybacks | 0 | 0 | 0 | 0 | 0 |
| = Paid out more than the free cash flow | 1,531 | 1,147 | |||
| Paid out, % of free cash flow | not meaningful | not meaningful |
What this means. The company's own net debt is slightly lower than ours because it counts current finance leases differently.
What could change Fortis’s dividend?
Management’s C$28.8 billion 2026–2030 capital plan targets 7% annual rate-base growth. It targets 4%–6% annual dividend growth through 2030. Disposed businesses are expected to reduce 2026 EPS by C$0.05.
Dividends begin at C$2.62 after a 4.4% increase from the latest C$2.51 annual payment. The base path reaches C$2.89 by October 2029, close to management's 4%–6% target. The bear case freezes the dividend after the first increase, while the bull reaches C$2.96 by applying the top of guidance as recovery improves. The five-year record shows increases every year, which supports growth but not an unlimited payout.
| October 2027 | October 2028 | October 2029 | |
|---|---|---|---|
| Earnings | 2,061 (1,970 / 2,134) | 2,169 (2,026 / 2,318) | 2,280 (2,084 / 2,516) |
| Dividends per share | 2.62 (2.62 / 2.62) | 2.75 (2.62 / 2.79) | 2.89 (2.62 / 2.96) |
| Price to earnings | 20.00 (16.00 / 22.00) | 20.00 (15.00 / 23.00) | 20.00 (15.00 / 24.00) |
What this means. The price to earnings figure means investors are paying twenty Canadian dollars for each Canadian dollar the company earns.