National Fuel Gas Company (NFG - Free Report) announced that the board of directors has approved a 2.3% increase in the quarterly dividend rate. The revised quarterly dividend will be 44.5 cents, payable on Jul 15, 2020 to shareholders of record at the close of business on Jun 30.
The company’s new annualized dividend rate is $1.78 per share, resulting in a dividend yield of 4.37%. This marks the 50th straight year of increase in annual dividend rate by the board of directors, reflecting its strong performance. The current dividend yield is better than the Zacks S&P 500 composite’s 1.87%.
Utilities’ History of Dividend Payment
The companies that are involved in utility services generally have stable operations and earnings. Consistent performance and the ability to generate cash flows allow utilities to reward shareholders with regular dividend. National Fuel Gas has been distributing dividend for 118 consecutive years.
It is not the only company with a track record of more than 100 years of consistent dividend payment. Utilities like Consolidated Edison, Inc. (ED - Free Report) and The York Water Company (YORW - Free Report) are also rewarding their shareholders with dividend payments for more than 100 years without fail.
Can We Expect Hikes in Coming Years?
National Fuel Gas’ acquisition of Royal Dutch Shell’s (RDS.A - Free Report) upstream and midstream assets in Pennsylvania for $500 million will be immediately accretive to earnings and production, post closure of the buyout. We expect the acquired assets to further boost the company’s performance, in turn enhancing earnings.
National Fuel Gas Company has invested $1.5 billion since 2010 in midstream operations to expand and modernize its pipeline infrastructure for gaining access to Appalachian production. The company has more than $1 billion pipeline projects under development. These projects, on completion, are expected to boost annual revenues by $150 million.
In addition, National Fuel Gas’ organic growth projects generate stable cash flow and assist management to carry on with shareholder-friendly initiatives.
In the past three months, National Fuel Gas’ shares have gained 10% compared with the industry’s rally of 7.9%.
National Fuel Gas currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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