Looking at estimates of Cash Flow (Fastgraphs) for FTS, I see that 2024 is estimated to be 7.69, 2025 is estimated to be 8.08 and 2026 is estimated to be 5.18.
First question is why such a drop off in 2026? A red flag for long term buyers, no?
Second question: how would such a scenario affect dividends/dividend increases?
Third question: how would preferred shares and in particular FTS.PR.K be affected?
thanks
Paul L
Our data (Bloomberg) shows expected rising EPS and cash flow into 2026, and also increasing free cash flow, but we would keep in mind that any estimate beyond a year is little more than a guess. We would not assume a decline here, however, as the company's business is regulated. There have been very tiny EPS declines in the past 20 years, largely due to either interest rates or one-time writeoffs. But, as a general rule, if cash flow does decline then dividends become less secure. Both preferred shares and common shares could see a lower valuation if investors get concerned. But we do not believe this will be the case at all here. FTS has increased its dividend every year for more than 50 years, and we would consider it one of the most 'reliable' stocks available. We would have no major concerns on either the common nor preferred shares.