Fortis Inc. Accelerates Growth with Strong Q1 2025 Results and Ambitious Capital Plan

Fortis Inc., a leading regulated utility company, delivered robust financial results for the first quarter of 2025, underscoring its strategic focus on infrastructure investment and dividend growth. With net earnings rising 8.7% year-over-year to $499 million and revenue hitting $3.34 billion—an 8.4% increase—Fortis has positioned itself as a resilient player in the energy sector. These gains, driven by rate base expansion, favorable currency exchange rates, and regulatory approvals, align with its ambitious five-year capital plan.

Financial Momentum Fuels Expansion

The company’s earnings per share (EPS) grew to $1.00, up 7.5% from Q1 2024, reflecting strong contributions from its U.S. Electric & Gas, ITC Transmission, and Western Canadian operations. Notably, the completion of Central Hudson’s 2024 rate case, which increased quarterly revenue starting July 2024, provided a significant tailwind. Meanwhile, the Canadian dollar’s weaker stance against the U.S. dollar boosted cross-border earnings, a trend that could persist if currency dynamics remain favorable.

The $26 Billion Capital Plan: A Pillar of Growth

At the heart of Fortis’ strategy is its $26 billion five-year capital plan (2025–2029), targeting a 6.5% compound annual growth rate (CAGR) in its rate base. This plan allocates 23% of funds to major projects, including ITC’s MISO Long-Range Transmission Plan, UNS Energy’s generation investments, and FortisBC’s Eagle Mountain Pipeline. The remaining 77% will support smaller regulated utility projects, ensuring steady returns. By 2029, the company aims to grow its rate base to $53 billion, up from $39 billion in 2024.

The capital plan’s execution is further bolstered by its dividend growth commitment, which promises a 4–6% annual increase through 2029. This aligns with Fortis’ 51-year streak of consecutive dividend hikes, a rare feat in the utility sector.

Shares have risen steadily, closing at $49.04 on May 6, 2025, near their 52-week high of $49.65, reflecting investor optimism in its growth trajectory.

Regulatory and Funding Strengths

Fortis’ regulatory environment remains supportive. Key approvals include FortisBC’s 2025–2027 rate framework, which adjusted depreciation rates while maintaining an innovation fund to support emerging technologies. Meanwhile, Tucson Electric Power is preparing a summer 2025 rate application, and Central Hudson’s pending request for a 10% allowed return on equity (ROE) could further boost profitability.

Funding for the capital plan is structured to minimize risk: 59% from cash flow, 30% from debt, and 11% from equity. In Q1 alone, Fortis secured $1 billion in long-term debt, including 7-year notes at 4.09% and 30-year U.S. notes at 5.90%, leveraging its strong credit ratings (Moody’s Baa3/Stable, S&P A-/Negative, DBRS A (low)/Stable).

Navigating Challenges and Seizing Opportunities

Despite headwinds like high capital expenditures and regulatory risks, Fortis’ diversified portfolio and focus on regulated assets provide stability. Growth opportunities beyond the capital plan include the ITC MISO LRTP Tranche 2.1 ($3.7–4.2 billion), UNS Energy’s transmission projects ($2.5–5.0 billion through 2038), and FortisBC’s Tilbury LNG expansion. The company’s clean energy initiatives, including GHG reduction targets for 2030, 2035, and 2050, also align with global sustainability trends, enhancing its long-term appeal.

Conclusion: A Steady Hand in Volatile Markets

Fortis Inc.’s Q1 results and strategic roadmap present a compelling case for investors seeking stable, dividend-driven growth. With a $26 billion capital plan underpinning a 6.5% CAGR in rate base, a 51-year dividend growth streak, and a robust balance sheet, the company is well-positioned to capitalize on regulated utility demand.

Crucially, its earnings momentum—$40 million net profit growth in just one year—and the execution of high-value projects like ITC’s transmission upgrades and FortisBC’s pipeline expansion suggest sustained value creation. Should regulatory approvals continue favorably and capital expenditures remain disciplined, Fortis could deliver $5.30–$5.50 EPS by 2029, supporting its dividend targets and stock price appreciation.

For income-focused investors, Fortis’ 4–6% annual dividend growth and a current yield of 4.5% (based on its $49.04 share price) offer a low-risk entry point. While macroeconomic uncertainties linger, Fortis’ regulated model and long-term contracts act as a buffer, making it a prudent choice in an uncertain market.

In summary, Fortis’ Q1 results are a testament to its disciplined strategy and regulatory resilience. With a clear path to growth and a shareholder-friendly approach, the company appears poised to navigate challenges while rewarding investors for years to come.