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Why ONE Gas (OGS) is a Top Dividend Stock for Your Portfolio
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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
ONE Gas in Focus
Based in Tulsa, ONE Gas (OGS - Free Report) is in the Utilities sector, and so far this year, shares have seen a price change of 8.88%. Currently paying a dividend of $0.62 per share, the company has a dividend yield of 2.94%. In comparison, the Utility - Gas Distribution industry's yield is 2.75%, while the S&P 500's yield is 1.43%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.48 is up 6.9% from last year. Over the last 5 years, ONE Gas has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.06%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, ONE Gas's payout ratio is 60%, which means it paid out 60% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, OGS expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $4.08 per share, which represents a year-over-year growth rate of 5.97%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that OGS is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Why ONE Gas (OGS) is a Top Dividend Stock for Your Portfolio
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
ONE Gas in Focus
Based in Tulsa, ONE Gas (OGS - Free Report) is in the Utilities sector, and so far this year, shares have seen a price change of 8.88%. Currently paying a dividend of $0.62 per share, the company has a dividend yield of 2.94%. In comparison, the Utility - Gas Distribution industry's yield is 2.75%, while the S&P 500's yield is 1.43%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.48 is up 6.9% from last year. Over the last 5 years, ONE Gas has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.06%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, ONE Gas's payout ratio is 60%, which means it paid out 60% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, OGS expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $4.08 per share, which represents a year-over-year growth rate of 5.97%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that OGS is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).