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National Fuel Gas (NFG) is a Top Dividend Stock Right Now: Should You Buy?

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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

National Fuel Gas in Focus

National Fuel Gas (NFG - Free Report) is headquartered in Williamsville, and is in the Utilities sector. The stock has seen a price change of 26.84% since the start of the year. The energy company is paying out a dividend of $0.46 per share at the moment, with a dividend yield of 3.49% compared to the Utility - Gas Distribution industry's yield of 3% and the S&P 500's yield of 1.33%.

Looking at dividend growth, the company's current annualized dividend of $1.82 is up 3.4% from last year. Over the last 5 years, National Fuel Gas has increased its dividend 5 times on a year-over-year basis for an average annual increase of 2.39%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. National Fuel Gas's current payout ratio is 53%. This means it paid out 53% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, NFG expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $3.95 per share, representing a year-over-year earnings growth rate of 35.27%.

Bottom Line

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer a quarterly payout.

For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, NFG is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).


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