Fortis Inc. (FTS): BCG Matrix [Dec-2025 Updated]

You're looking at Fortis Inc.'s portfolio right now, and it's a fascinating mix as we hit late 2025. We've got Stars like the massive ITC transmission expansion fueled by a $28.8 billion capital plan, sitting right next to Cash Cows like the core Canadian utilities that make up almost 93% of the asset base. Still, the company just shed its Caribbean Dogs, while Question Marks loom with potential US$3.7-$4.2 billion bets on MISO Tranche 2.1 and new tech. Let's break down exactly where Fortis Inc. is placing its chips across the BCG Matrix to see where the real action is.

Background of Fortis Inc. (FTS)

You're looking at Fortis Inc. (FTS), which stands as a major, diversified leader in the North American regulated electric and gas utility sector. Headquartered in St. John's, Newfoundland and Labrador, Fortis operates a portfolio of essential energy infrastructure across a wide geographic spread. As of September 30, 2025, the Corporation reported total assets of $75 billion, with its 2024 revenue standing at $12 billion. This extensive network serves utility customers across five Canadian provinces, ten U.S. states, and several Caribbean countries, making it Canada's largest investor-owned utility business. It's defintely a utility giant.

The operational focus of Fortis is heavily weighted toward stability, with approximately 93% of its assets dedicated to the transmission and distribution of electricity or gas, which provides those steady, essential services. Geographically, about ~64% of its assets are situated in the U.S., with ~33% in Canada and the remaining ~3% in the Caribbean. This structure is virtually 100% regulated, split roughly between ~82% regulated electric and ~17% regulated gas operations. A key recent strategic move involved the closing of the FortisTCI disposition in September 2025 and the sale of its Belize assets in October 2025, solidifying a portfolio comprised of 100% regulated assets to strengthen the balance sheet.

Growth for Fortis is anchored by significant capital deployment, which supports its rate base expansion. The company recently unveiled its new 2026-2030 capital plan totaling $28.8 billion, an increase of $2.8 billion over the previous outlook. This plan is designed to grow the midyear rate base from $41.9 billion in 2025 to $57.9 billion by 2030, targeting an annual growth rate of 7.0%. This strategy underpins their commitment to shareholders, evidenced by the recent 4.1% increase in the fourth-quarter dividend, extending their impressive track record of annual dividend increases to 52 consecutive years through 2025, with guidance set for 4-6% annual dividend growth through 2030. For context, the third quarter of 2025 saw adjusted net earnings per common share reach $0.87.

Fortis Inc. (FTS) - BCG Matrix: Stars

You're looking at the core growth engines for Fortis Inc. (FTS) right now-the business units operating in high-growth markets where the company holds a strong, often regulated, market position. These are the Stars that demand significant capital to maintain their leadership and fuel future conversion into Cash Cows.

The entire strategy hinges on executing the latest five-year capital plan, which totals $28.8 billion for the period spanning 2026 through 2030. This investment level is designed to directly support the company's ambitious target of achieving a 7.0% compound annual rate base growth through 2030. For context, this plan is expected to grow the midyear rate base from $41.9 billion in 2025 to $57.9 billion by 2030.

For the current year, 2025, capital investments are expected to total approximately $5.6 billion, up from prior expectations, reflecting the acceleration of these high-priority growth areas.

The key components driving this Star category are:

• ITC Holdings' transmission expansion.
• UNS Energy's investments in Arizona.
• Projects supporting the 7.0% CAGR rate base target.
• The Roadrunner Reserve 1 battery storage project.

ITC Holdings is a major focus, with investments heavily tied to the Midcontinent Independent System Operator (MISO) long-range transmission plan (LRTP). This is where Fortis Inc. is positioning for massive grid modernization and energy transition spending in the U.S. Midwest.

Here's a breakdown of the major capital commitments driving this segment:

The growth at UNS Energy in Arizona, specifically through Tucson Electric Power (TEP), is another significant Star component, directly linked to the energy transition and massive data center load growth. TEP is capitalizing on this demand, having reported up to 10,000 megawatts (MW) of service requests. This high-growth environment necessitates significant investment in reliability and storage.

The Roadrunner Reserve 1 battery storage system is a concrete example of this investment, expected to be ready for use in 2025. This system is a 200-MW, 800-megawatt-hour (MWh) battery energy storage asset, with an estimated investment of about $350 million by TEP. Its counterpart, Roadrunner Reserve II, a similarly sized 200 MW system, is scheduled for operation in early 2026. These storage projects are critical for integrating intermittent renewable resources and managing peak summer demand driven by customer growth.

The success in these high-growth, regulated areas underpins Fortis Inc.'s commitment to its shareholders, as this execution supports the extended annual dividend growth guidance of 4% to 6% through 2030.

You should track the regulatory outcomes in Arizona closely, as they directly impact the recovery timeline for these large Star investments.

Fortis Inc. (FTS) - BCG Matrix: Cash Cows

Cash Cows for Fortis Inc. are the established, mature utility operations that command a high market share within their regulated service territories, generating substantial, predictable cash flow to fund the broader enterprise.

FortisBC's established electric and natural gas distribution networks in British Columbia represent a core Cash Cow. For 2025, the forecast average rate base for FortisBC Inc. was set at $1,794 million, supported by an interim and refundable rate increase of 5.65% over 2024 rates. This business unit benefits from a local leadership model and operates in a low-competition environment, which is typical for a market leader in a mature sector.

Newfoundland Power, which Fortis Inc. owns entirely, provides another pillar of stable, regulated cash flow with a high market share within its service territory. While specific 2025 standalone figures aren't as granularly available, its inclusion in the regulated portfolio underscores its role in providing dependable returns.

The core Canadian regulated utilities, which include FortisBC and FortisAlberta, underpin the company's remarkable financial consistency. Fortis Inc. has achieved a 52 consecutive year annual dividend increase, a testament to the reliability of these assets. Management has extended the annual dividend growth guidance to 4-6% through 2030. The most recent reported quarterly dividend increase was 4.1%, setting the fourth quarter common share dividend at C$0.64 per share, equating to an annualized payout of C$2.56 per share. The forward dividend yield is approximately 3.48%.

Predictable earnings from regulated assets are the engine of Fortis Inc.'s stability. As of the third quarter of 2025, total assets stood at $75 billion, with the 2025F rate base estimated at $40.7 billion. About 93% of Fortis Inc.'s assets are dedicated to transmission and distribution of electricity or gas, which are essential services. This high concentration in regulated T&D (Transmission & Distribution) assets ensures high market share and low growth volatility, fitting the Cash Cow profile perfectly.

The financial structure reflects this focus:

The company's strategy is to maintain this position, investing to support efficiency rather than aggressive market expansion in these core areas. The 2026-2030 capital plan totals $28.8 billion, designed to grow the rate base at an annualized rate of 7.0% through 2030, which supports the dividend growth guidance.

Key characteristics supporting the Cash Cow designation include:

• Operates 10 regulated utilities across 16 jurisdictions.
• Achieved 52 consecutive years of dividend increases.
• Asset base is virtually 100% regulated.
• Expected dividend growth guidance of 4-6% annually through 2030.
• FortisBC 2025 forecast rate base of $1,794 million.

Fortis Inc. (FTS) - BCG Matrix: Dogs

You're looking at the units within Fortis Inc. (FTS) that, while perhaps necessary for a time, no longer fit the core, high-growth, regulated utility strategy as of late 2025. These are the classic Dogs-low market share in their specific, often non-core, segments and low growth prospects, making them candidates for divestiture or minimization.

Caribbean utility assets, specifically FortisTCI and the Belize operations, have been actively removed from the portfolio. Fortis Inc. completed the disposition of its utility in Turks and Caicos, FortisTCI, in September 2025. Following that, the assets in Belize, which included non-regulated hydro generation facilities, were sold in October 2025. The immediate financial impact of the FortisTCI sale included income taxes and closing costs totaling approximately CAD 0.06 per common share recognized in the third quarter of 2025. Management stated that the Belize transaction is not expected to have a material impact on adjusted earnings going forward. These sales support the strategy to focus on low-risk, regulated utility growth, strengthening the balance sheet with the proceeds.

Non-core, smaller-scale generation facilities represent another area fitting the Dog profile, often characterized by limited growth potential outside the regulated rate base. The sale of the non-regulated hydro generation facilities in Belize is the most concrete example of exiting this type of asset in 2025. For context on generation assets being minimized versus those being prioritized, consider the UNS Energy coal-to-natural-gas conversion at Springerville, which reduced prior generation spend by approximately $900 million, while potential new incremental generation remains contingent on data center agreements, estimated between $1.5 billion and $2.0 billion through 2030.

Assets facing the expiration of favorable regulatory incentives also fall into this category, as the cash flow predictability diminishes. At FortisAlberta, the efficiency carry-over mechanism (ECM), a regulatory incentive that allowed the utility to benefit from efficiency gains achieved during a prior Performance-Based Regulation (PBR) term, was only available to the end of 2024. The third-generation PBR plan for FortisAlberta, effective from 2024 through 2028, explicitly removed the ECM. This removal means the revenue stream associated with that specific incentive mechanism has ceased, classifying the underlying performance structure as less attractive going forward compared to assets under the new, stable regulatory frameworks.

Here's a quick look at the scale of the overall business versus the divested/minimized assets' former segment:

The strategic action taken by Fortis Inc. is to shed these lower-return, non-core, or expiring incentive-dependent units to concentrate capital on the core regulated growth areas. You can see this focus in the new five-year capital plan of $28.8 billion, which supports a 7.0% annual rate base growth target through 2030.

• Divested utility in Turks and Caicos (FortisTCI) in September 2025.
• Sold assets in Belize, including non-regulated hydro, in October 2025.
• FortisAlberta Efficiency Carry-over Mechanism (ECM) ended after 2024.
• The new FortisAlberta PBR term (2024-2028) removed the ECM.
• Proceeds from dispositions are used to strengthen the balance sheet.

Fortis Inc. (FTS) - BCG Matrix: Question Marks

These business units represent areas within Fortis Inc. that operate in high-growth markets but currently hold a relatively low market share across the broader utility landscape, demanding significant cash investment before they mature into Stars.

Central Hudson (New York) operations, while smaller in scale relative to the entire Fortis Inc. portfolio, is actively managing its regulatory framework to secure future returns. The New York State Public Service Commission approved a three-year rate plan for Central Hudson in August 2025, effective retroactively to July 1, 2025. This plan includes the continuation of a 9.5% allowed Return on Equity (ROE) and maintains a 48% common equity component in the capital structure.

FortisBC has several potential large-scale Liquefied Natural Gas (LNG) expansion projects that fit this quadrant due to the high capital outlay and extended regulatory timelines. The Tilbury LNG Storage Expansion project, which is part of the broader Tilbury Phase 2 LNG Expansion Project, has an anticipated in-service date by 2030 and an estimated cost of $1.14 billion. The Phase 2 expansion proposes additional liquefaction capacity of up to 2.5 million tonnes per year to serve emerging markets like marine fueling, and a new storage tank that could increase current storage capacity approximately 2.5 times.

Future investments in the Midcontinent Independent System Operator (MISO) Long Range Transmission Plan (LRTP) Tranche 2.1 represent significant capital deployment with regulatory uncertainty regarding final cost allocation. The total MISO LRTP Tranche 2.1 Portfolio, approved by the MISO Board of Directors in December 2024, involves 24 projects estimated at $21.8 billion. Fortis Inc.'s involvement, primarily through ITC Holdings Corp., is a major component of this high-growth, high-capital need area.

The following table outlines the key financial and scale metrics associated with these Question Mark areas, based on the latest available data and required scenario elements:

New technology integration, such as hydrogen blending and carbon capture utilization and storage, requires capital with regulatory recovery paths that are still developing. FortisBC continues to support these efforts through its Clean Growth Innovation Fund, which was approved by the British Columbia Utilities Commission to run from 2025 through 2027. Since its launch in 2020, the fund has approved over 65 innovative projects, totaling approximately $20 million in funding.

The strategic imperative for these Question Marks involves clear choices:

• Invest heavily to rapidly capture market share.
• Divest if the path to Star status is unclear or too costly.
• Focus on securing regulatory approval for cost recovery.

For Central Hudson, the approved 9.5% ROE provides a foundation, but scale remains a factor in its overall portfolio contribution. The LNG expansion and MISO investments are multi-year, multi-billion dollar commitments that consume cash now for future rate base growth, targeting a 7.0% annual rate base growth from $41.9 billion in midyear 2025 to $57.9 billion by 2030.