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ONE Gas (OGS) Raises Quarterly Dividend, Lowers '23 EPS View
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ONE Gas, Inc. (OGS - Free Report) announced that its board of directors has approved a 1.5% increase in its quarterly dividend rate. The new dividend rate will be 66 cents per share compared with the previous quarter’s 65 cents, payable on Mar 8, 2024, to stockholders of record as of Feb 23, 2024.
This increase resulted in an annualized dividend of $2.64 per share compared with the previous level of $2.60. ONE Gas’ current dividend yield is 4.25%, higher than the Zacks S&P 500 Composite's average of 1.36%. The company expects an average annual dividend increase of 1-2% through 2028, with a target dividend payout ratio of approximately 55-65%, subject to approval by the board of directors.
2023 Guidance Update
ONE Gas narrowed its 2023 guidance for earnings to $4.12-$4.16 per share from the previously projected range of $4.06-$4.22. The company expects net income to be in the range of $229-$233 million compared with the previously estimated band of $227-$236 million. Capital investments for 2023 are expected to be approximately $725 million.
Can ONE Gas Sustain Dividend Hikes?
The company expects capital expenditures to be $4.25 billion or in the range of $750-$950 million per year during 2024-2028. Nearly 70% of the planned capital expenditure will be directed toward system integrity and replacement projects. ONE Gas expects earnings per share to increase 4-6% annually through 2028.
This 100% regulated natural gas distribution utility has a high percentage of residential customers, providing stability and strong visibility of future earnings. More than 93% of the company’s customers belong to the residential category. OGS was able to register higher customer addition and is expected to continue to do so in the future, courtesy of improving economic conditions in its service territories.
In addition, ONE Gas’ supply assets are in close proximity to gas reserves. This results in lower transportation, storage and commodity costs, as well as provides it with a competitive advantage. The company continues to provide high-quality services to customers.
ONE Gas has the potential to expand and improve even more, which suggests that management will have sufficient funds to continue with its shareholder-friendly activities in the future.
Legacy of Utilities
Companies involved in utility services generally have stable operations and earnings. Consistent performance, regulated returns and the ability to generate cash flows allow utilities to reward shareholders with regular dividends.
Recently, NRG Energy (NRG - Free Report) , Alliant Energy (LNT - Free Report) and WEC Energy Group (WEC - Free Report) have raised their quarterly dividend rate by 8%, 6.1% and 7%, respectively.
The Zacks Consensus Estimate for NRG Energy’s 2024 earnings is pegged at $6.28 per share, implying a year-over-year increase of 14.1%. NRG’s current dividend yield is 2.87%.
The Zacks Consensus Estimate for Alliant Energy’s 2024 earnings is pegged at $3.08 per share, implying a year-over-year increase of 6.8%. LNT’s current dividend yield is 3.71%.
The Zacks Consensus Estimate for WEC Energy’s 2024 earnings is pegged at $4.90 per share, implying a year-over-year increase of 6.2%. WEC’s current dividend yield is 3.91%.
Price Performance
In the past month, ONE Gas’ shares have lost 6% compared with the industry’s decline of 4.1%.
Image Source: Zacks Investment Research
Zacks Rank
ONE Gas currently carries a Zacks Rank #5 (Strong Sell).
Image: Bigstock
ONE Gas (OGS) Raises Quarterly Dividend, Lowers '23 EPS View
ONE Gas, Inc. (OGS - Free Report) announced that its board of directors has approved a 1.5% increase in its quarterly dividend rate. The new dividend rate will be 66 cents per share compared with the previous quarter’s 65 cents, payable on Mar 8, 2024, to stockholders of record as of Feb 23, 2024.
This increase resulted in an annualized dividend of $2.64 per share compared with the previous level of $2.60. ONE Gas’ current dividend yield is 4.25%, higher than the Zacks S&P 500 Composite's average of 1.36%. The company expects an average annual dividend increase of 1-2% through 2028, with a target dividend payout ratio of approximately 55-65%, subject to approval by the board of directors.
2023 Guidance Update
ONE Gas narrowed its 2023 guidance for earnings to $4.12-$4.16 per share from the previously projected range of $4.06-$4.22. The company expects net income to be in the range of $229-$233 million compared with the previously estimated band of $227-$236 million. Capital investments for 2023 are expected to be approximately $725 million.
Can ONE Gas Sustain Dividend Hikes?
The company expects capital expenditures to be $4.25 billion or in the range of $750-$950 million per year during 2024-2028. Nearly 70% of the planned capital expenditure will be directed toward system integrity and replacement projects. ONE Gas expects earnings per share to increase 4-6% annually through 2028.
This 100% regulated natural gas distribution utility has a high percentage of residential customers, providing stability and strong visibility of future earnings. More than 93% of the company’s customers belong to the residential category. OGS was able to register higher customer addition and is expected to continue to do so in the future, courtesy of improving economic conditions in its service territories.
In addition, ONE Gas’ supply assets are in close proximity to gas reserves. This results in lower transportation, storage and commodity costs, as well as provides it with a competitive advantage. The company continues to provide high-quality services to customers.
ONE Gas has the potential to expand and improve even more, which suggests that management will have sufficient funds to continue with its shareholder-friendly activities in the future.
Legacy of Utilities
Companies involved in utility services generally have stable operations and earnings. Consistent performance, regulated returns and the ability to generate cash flows allow utilities to reward shareholders with regular dividends.
Recently, NRG Energy (NRG - Free Report) , Alliant Energy (LNT - Free Report) and WEC Energy Group (WEC - Free Report) have raised their quarterly dividend rate by 8%, 6.1% and 7%, respectively.
The Zacks Consensus Estimate for NRG Energy’s 2024 earnings is pegged at $6.28 per share, implying a year-over-year increase of 14.1%. NRG’s current dividend yield is 2.87%.
The Zacks Consensus Estimate for Alliant Energy’s 2024 earnings is pegged at $3.08 per share, implying a year-over-year increase of 6.8%. LNT’s current dividend yield is 3.71%.
The Zacks Consensus Estimate for WEC Energy’s 2024 earnings is pegged at $4.90 per share, implying a year-over-year increase of 6.2%. WEC’s current dividend yield is 3.91%.
Price Performance
In the past month, ONE Gas’ shares have lost 6% compared with the industry’s decline of 4.1%.
Image Source: Zacks Investment Research
Zacks Rank
ONE Gas currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.