FortisFTS

Key highlights

• Rate base growth driving earnings: Earnings rose to $396 million in the second quarter, up from $384 million last year, as growth in the rate base, which is the value of the assets a utility uses to serve customers and on which it is allowed to earn a return, offset higher interest costs. This growth was most visible at ITC and the company's Canadian utilities, which together added $17 million in earnings over the same period last year.
• Weather lifting energy demand: Warmer weather in Arizona helped push retail electricity sales at UNS Energy up to 2,829 gigawatt hours, a significant jump from 2,666 gigawatt hours a year ago. While higher sales usually boost profits, the benefit was mostly cancelled out by higher operating costs and the timing of expenses that have not yet been built into customer rates.
• Capital spending on plan: The company invested $2.7 billion in the first half of 2026, putting it on track to hit its annual spending goal of $5.6 billion for the year. This steady investment in power lines and gas pipes is what allows the company to grow its rate base and supports its goal of increasing the dividend every year.
• Dividend streak continues: The quarterly dividend was raised 4.1% to $0.64 per share, marking the fifty second year in a row the company has increased its payout to owners. Management continues to target annual dividend increases between 4% and 6% through the year 2030, which provides a predictable return for long term investors.
• Data center demand steady: The company is still tracking 300 megawatts of potential new demand from data centers at its ITC division, which manages high voltage power transmission. Securing these large customers would provide a new source of growth for the business beyond its traditional residential and industrial connections.
• Growth outlook maintained: Management expects the rate base to grow at a 6% compound annual rate through 2030, which would increase the total value of its regulated assets from $37 billion in 2024 to $53 billion by the end of the decade. This long term plan is the primary driver for the company's goal to keep raising dividends by 4% to 6% annually.

Our take: This was a solid and predictable quarter for a company that prides itself on being boring in the best way. The 3.1% rise in earnings confirms that steady investments in its power and gas networks are translating into growth for shareholders. It reinforces the case for owning the stock for reliable income.