Fortum is still Sweden’s largest electricity company with just over a million customers and a good margin over second place Vattenfall.

Now I’m not the most knowledgeable about tariffs, but energy companies have undoubtedly done better than many others. The price of oil has dropped a bit, so companies like Aker BP have taken a hit, but that’s not mainly due to tariffs. If we look at more pure energy companies like Enbridge, they’ve done really well.

When the stock market goes down, most things go down, and Fortum is no exception, I suppose. Fortum is a Finnish group within power generation, district heating and electricity trading. In my opinion, there are two reasons why you should even look at this company.

First and foremost, it is electrification, a factor that will likely drive up companies that generate this important resource. Sure, we have seen lower electricity prices, but in the long term, demand will increase. That is what Fortum themselves are talking about in their latest presentation. Of course, this is an estimate and nothing more.

Then we have nuclear power, which is as hated as it is now loved. This is the core of Fortum and if you don’t like the future of nuclear power, you should avoid the company altogether, I think. I personally believe in the future of nuclear power and that we must look beyond what happened in Chernobyl.

The most important part of Fortum’s power generation in the Nordic region, which is mainly located in Finland and Sweden. For example, Fortum is a partner in the Oskarshamn and Forsmark nuclear power plants.

One difference with Fortum compared to other energy companies is that the ownership interest in wind power is minimal. Recently, Fortum announced that it is moving forward with developing concrete reactor projects in both Sweden and Finland. Many have become somewhat more positive about nuclear power as we realize that we cannot rely on Russia.

If you look at Fortum’s annual report, you can see that they divide their operations into three areas.

• Generation – as mentioned, power generation itself is the core of their business. The image that describes where this comes from is above. Some capacity in coal power and wind power exists but absolutely no quantities.
• City Solutions – this includes district heating and cooling services but also solar projects in India. The district heating is mainly powered by waste or biomass. The network is located in the Nordic countries and Poland.
• Consumer Solutions – this is the electricity trading division itself, where the company has just over 2 million customers. It also has electricity trading in Poland and Spain.

Fortum Dividend

The dividend has previously been paid twice a year; in April and October. Starting this year, 2025, it appears that the dividend will be paid once, in April. At that time, both an ordinary dividend of EUR 0.9 and an extra dividend of EUR 0.5 will be paid out.

In the chart below showen Fortum’s dividend history with respect to the financial year. The amount in 2024 is therefore the financial year that will then be paid out in 2025. It is not an impressive statistic and since 2007 the dividend has basically stood still.

Fortum Direct Return

The high dividend yield is the best thing you get when you invest in Fortum. This has historically been really high and is currently 10.3% if we calculate at today’s price and the extra dividend.

Historically, the yield has been anywhere between 5-10%, but the average is around 7%. So this is a real high dividend.

Year	Direct return (%)
2024	10.4
2023	8.8
2022	5.9
2021	4.2
2020	5.7
2019	5
2018	5.8
2017	6.7
2016	7.5
2015	7.9
2014	7.2

Fortum dividend share

The dividend payout ratio is an important key figure that shows how much margin of safety there is in what is distributed. If a company makes 1 SEK in profit and distributes 50 öre of this, it will be a 50% dividend payout ratio. EPS stands for Earnings per Share, i.e. profit per share.

In recent years, this has fluctuated quite significantly and in some cases exceeded 100%. Despite this, Fortum has done exceptionally well and has in principle never reduced its regular dividend. The fact that it is now at 90% and that an extra dividend has been made, I think it feels safe.

Year	Dividend ratio (%)
2024	90
2023	90
2022	80
2021	137
2020	55
2019	66
2018	116
2017	112
2016	196
2015	24
2014	37

Fortum Total Return

This is the negative thing about Fortum. Over the past 5 years, you as an investor have received 52% in total return if we take into account the large price drop that has occurred recently. This gives 8.7% annually, so you can really say that you get the dividend and not much more. On the other hand, it is not so unique for this type of company.

Another negative thing is that Fortum has been really bad at buying back shares over the years. You can find a few buybacks in 2007 but otherwise it’s pretty empty. In short, they have focused on dividends and not much else.

How is the future

I can agree that Fortum looks appetizing, but this is certainly not a rocket company if I say so myself. But of course, I have been convinced many times before. Fortum has had a very nice journey after the pandemic thanks to the higher electricity prices but has now come down a lot as electricity prices have been significantly lower.

I think the company’s new investments in nuclear power are exciting and something that is actually needed.

If you want a high dividend yielder that pays out a lot to its owners, this is a great choice. Given the company’s very stable cash flows, you would ideally like to see them start paying out quarterly dividends. I would say this is a perfect defensive stock to own for someone who lives on dividends.