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Reasons to Add New Jersey Resources (NJR) to Your Portfolio

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New Jersey Resources’ (NJR - Free Report)  investments to expand natural gas transmission and distribution pipelines will allow it to cater to the rising customer demand. Stable dividends and strong earnings growth make NJR a solid choice for investments in the gas distribution space.

Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Growth Projections

The Zacks Consensus Estimate for fiscal 2022 earnings has been raised 5.6% in the past 90 days. Fiscal 2022 earnings and sales estimates suggest growth of 13.9% and 27.2%, respectively, from the year-ago reported numbers.

New Jersey Resources’ long-term (three to five years) earnings growth rate is currently pegged at 6%.

Systematic Investments

New Jersey Resources makes consistent investments to upgrade and maintain the existing infrastructure to provide 24x7 reliable services to its customers. In the first nine months of fiscal 2022, NJR’s capital expenditure was $419.4 million, including accruals, of which $194.8 million was related to New Jersey Natural Gas.

Cash Flow & Dividend

New Jersey Resources has been generating strong cash flow, which is supporting regular dividend payouts. Cash flow from operations for fiscal 2022 and 2023 is expected to be $225-$245 million and $410-$430 million, respectively.

NJR expects to distribute dividends of $127-$132 million in fiscal 2022 and $135-$140 million in 2023, subject to the approval of its board of directors.

New Jersey Resources has paid out quarterly dividends since its inception in 1952. On Sep 14, 2022, NJR’s board of directors approved an increase in the quarterly dividend rate, taking the total to 39 cents per share or $1.56 annually, up 7.6% from the previous quarterly rate of 36 cents per share. This marks the 29th dividend increase.

Currently, New Jersey Resources has a dividend yield of 3.3% compared with the industry’s 2.8%.

Return on Equity

Return on Equity (ROE) is a measure of a company’s efficiency in utilizing shareholders’ funds. ROE for the trailing 12 months for New Jersey Resources is 11.5% compared with the industry’s 9.7%. This indicates that NJR is utilizing its funds better than its peers.

Price Performance

In the past year, the stock has rallied 26.8% compared with the industry’s growth of 21.1%.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

Other Stocks to Consider

Some other top-ranked stocks from the same industry are South Jersey Industries (SJI - Free Report) , Chesapeake Utilities Corporation (CPK - Free Report) and Atmos Energy Corporation (ATO - Free Report) . All companies currently carry a Zacks Rank #2.

The Zacks Consensus Estimate for 2022 earnings per share of South Jersey Industries, Chesapeake Utilities and Atmos Energy has moved up 6.2%, 6.6% and 8.8%, respectively, year over year.

South Jersey Industries, Chesapeake Utilities and Atmos Energy delivered average earnings surprises of 2.2%, 10.1% and 1.5%, respectively, in the last four quarters.

In the past year, SJI, CPK and ATO have gained 49.1%, 1.1% and 28.1%, respectively.

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