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Atmos Energy's (ATO) Board Approves 8.8% Hike in Dividend

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Atmos Energy Company (ATO - Free Report) announced that the board of directors has approved an 8.8% increase in the annual dividend rate. The revised quarterly dividend will be 68 cents, payable on Dec 13, 2021 to shareholders of record at the close of business on Nov 29.

Atmos Energy’s new annualized dividend rate is $2.72 per share, resulting in a dividend yield of 2.87%. This marks the 38th consecutive year of increase in the annual dividend rate by the board of directors, reflecting its strong performance.

Can We Expect Hikes in Coming Years?

Atmos Energy aims to invest in the range of $13-$14 billion in the fiscal 2022-2026 time frame, of which more than 80% will be directed to enhance the safety of the existing operations. Strengthening of infrastructure will allow ATO to easily support the increasing demand from its expanding customer base.  In fiscal 2021, Atmos Energy invested $2 billion, and replaced more than 1,100 miles of old distribution and transmission lines to enhance the reliability of its operations.

More than 90% of Atmos Energy’s annual capital investments start earning returns within six months and nearly 99% in no more than 12 months. ATO gains from customer additions and constructive rate outcomes.

In fiscal 2021, Atmos Energy was serving 51,000 new customers compared with fiscal 2020, which enhanced the demand for its services and boosted revenues. Atmos Energy aims to increase dividend in the range of 6-8% per year, subject to approval of the board of directors. Stable earnings and expanding customer base will allow ATO's management to continue with annual dividend hikes.

Utilities’ History of Dividend Payments

Utility companies provide essential services like electricity, water and natural gas to customers. The demand for the services provided by the utilities is generally stable. The regulated nature of operations ensures steady earnings. Consistent performance and the ability to generate cash flows allow utilities to reward shareholders with regular dividends. Utilities like National Fuel Gas (NFG - Free Report) , Consolidated Edison, Inc. (ED - Free Report) and The York Water Company (YORW - Free Report) are rewarding their shareholders with dividend payments for more than 100 years without fail.

The current dividend yield of National Fuel Gas, Consolidated Edison, and York Water is 3.09%, 3.98%, and 1.52%, respectively, higher than the Zacks S&P 500 composite’s 1.35%.

Price Movement

In the past months, Atmos Energy’s shares have gained 2.8% against the industry’s decline of 0.1%.

Zacks Investment ResearchImage Source: Zacks Investment Research

Zacks Rank

Atmos Energy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.