Dividend Kings In Focus: National Fuel Gas

Up to date on July ninth, 2025 by Felix Martinez

In 2024, Nationwide Gas Gasoline (NFG) raised its dividend for the fifty fifth consecutive 12 months. That places the corporate among the many elite Dividend Kings, a small group of shares which have elevated their payouts for no less than 50 consecutive years.

You’ll be able to see the total record of all 55 Dividend Kings right here.

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Dividend Kings In Focus: National Fuel Gas

Nationwide Gas Gasoline has remained a comparatively small firm, buying and selling at a market capitalization of $7.5 billion. Nonetheless, a small market cap isn’t a destructive function when investing; fairly the opposite.

Regardless of its small measurement, Nationwide Gas Gasoline has promising long-term progress prospects and an affordable valuation. Moreover, the inventory gives a dividend yield of two.6%, which is considerably larger than the 1.2% yield of the S&P 500, and there’s room for additional dividend will increase sooner or later.

Enterprise Overview

Nationwide Gas Gasoline is a diversified and vertically built-in firm working in 4 segments: Exploration and Manufacturing, Pipeline and Storage, Gathering, and Utility. The upstream section (exploration and manufacturing) is by far an important one, because it generates 48% of the corporate’s EBITDA.

The midstream division (pipeline & storage, and gathering) generates 39% of EBITDA, whereas the downstream section (utility) generates the remaining 13% of EBITDA.

Whereas Nationwide Gas Gasoline seems to be a pure commodity inventory on the floor, with all of the disadvantages related to the boom-and-bust cycles of commodity producers, the corporate has a superior enterprise mannequin in comparison with different commodity producers. Due to its vertically built-in enterprise mannequin, it enjoys vital synergies.

Supply: Investor Presentation

Its midstream and downstream companies present a considerable buffer when pure fuel costs lower. Furthermore, the corporate enjoys larger returns on its investments, as each its upstream and midstream divisions profit from its investments in manufacturing progress tasks.

Nationwide Gas Gasoline Firm reported Q2 2025 GAAP web earnings of $216 million ($2.37 per share), up 32% from $166.3 million ($1.80 per share) in Q2 2024. Adjusted working outcomes have been $218.3 million ($2.39 per share), a 34% improve, pushed by larger pure fuel costs and manufacturing. Seneca’s Exploration and Manufacturing section produced a document 105.5 Bcf of pure fuel, up 3%, with earnings of $97.8 million, boosted by a $0.38/Mcf worth improve to $2.94/Mcf and decrease working prices. The Utility section’s web earnings rose 44% to $63.5 million, pushed by a 2024 New York fee settlement. Pipeline & Storage earnings elevated 5% to $31.7 million, whereas Gathering earnings fell 8% to $26.3 million as a result of larger bills.

The corporate raised its fiscal 2025 adjusted EPS steering to $6.75–$7.05, up $0.15 on the midpoint, reflecting stronger Seneca manufacturing (415–425 Bcf) and decrease unit prices. Capital expenditures are anticipated to stay at $885–$960 million. Financing actions included $1 billion in new notes to refinance $950 million in debt, leading to an after-tax lack of $1.7 million. The corporate assumes NYMEX pure fuel costs of $3.50/MMBtu for the remainder of 2025, with sensitivities exhibiting EPS ranges of $6.50–$7.35 primarily based on worth fluctuations.

CEO David Bauer highlighted sturdy operational outcomes, notably within the Japanese Growth Space, and the advantages of latest fee settlements. Nationwide Gas’s built-in mannequin and threat administration place it to navigate financial uncertainties. The corporate expects to keep up inexpensive buyer charges whereas investing in infrastructure, driving long-term progress and shareholder worth regardless of potential tariff impacts.

Progress Prospects

Nationwide Gas Gasoline pursues progress by growing its pure fuel manufacturing and increasing its pipeline community. The corporate has grown its earnings per share at a mean annual fee of seven.8% since 2014.

As the worth of pure fuel was considerably larger in 2014 than it’s as we speak, the expansion in earnings has primarily resulted from the corporate’s constant manufacturing progress.

And the corporate has promising progress prospects forward.

Supply: Investor Presentation

Due to a latest partial restoration in pure fuel costs, Nationwide Gas Gasoline has barely raised its steering for earnings per share in fiscal 2025.

Furthermore, the corporate nonetheless has promising progress prospects in the long term, particularly on condition that pure fuel is taken into account a a lot cleaner gas than oil merchandise, and therefore it’s rather more resilient to the continued growth of renewable vitality tasks than oil merchandise.

Total, we anticipate Nationwide Gas Gasoline to develop its earnings per share by roughly 3.0% yearly over the subsequent 5 years, pushed by the corporate’s sustained manufacturing progress, in addition to the excessive cyclicality of pure fuel costs.

Aggressive Benefits & Recession Efficiency

As talked about above, the upstream section of Nationwide Gas Gasoline generates 48% of its complete EBITDA, with pure fuel comprising roughly 90% of the full output. The corporate is susceptible to fluctuations within the worth of pure fuel. This sensitivity was obvious in 2015 and 2016, when the worth of pure fuel collapsed, leading to substantial losses for the corporate.

Alternatively, due to its vertically built-in enterprise mannequin, Nationwide Gas Gasoline is extra resilient to downturns than most oil and fuel producers, as its midstream and utility companies present a considerable buffer throughout downturns.

The superior enterprise mannequin of Nationwide Gas Gasoline helps clarify its admirable dividend progress document. The corporate has paid uninterrupted dividends for 122 consecutive years and has raised its dividend for 55 straight years.

That is a formidable achievement for a commodity producer, as commodities are notorious for his or her excessive cyclicality, which ends up in dramatic boom-and-bust cycles.

Supply: Investor Presentation

Given the wholesome payout ratio of 29% (primarily based on anticipated 2025 adjusted EPS) and the corporate’s respectable steadiness sheet, the dividend might be thought of secure for the foreseeable future. We anticipate Nationwide Gas Gasoline to proceed growing its dividend for a few years to return.

Valuation & Anticipated Returns

Nationwide Gas Gasoline is presently buying and selling at 11.7 occasions its anticipated earnings of $6.90 per share this 12 months. This earnings a number of is decrease than the typical price-to-earnings ratio of 13.0 during the last 5 years. Our honest worth estimate for NFG inventory is a P/E of 12.6. If the P/E a number of expands from 11.7 to 12.6 by 2030, it can elevate annual returns by 1.4% per 12 months over the subsequent 5 years.

Given the three% estimated annual progress of earnings-per-share, the two.6% dividend, and a 1.4% annualized enlargement of the price-to-earnings ratio, we anticipate Nationwide Gas Gasoline to supply a 7.0% common annual complete return over the subsequent 5 years. This makes the inventory a “maintain” in our view.

Ultimate Ideas

Nationwide Gas Gasoline is very delicate to fluctuations within the worth of pure fuel. Alternatively, its midstream and utility segments present sturdy assist to its monetary outcomes throughout downturns.

Total, the midstream and utility segments present dependable money flows, whereas the upstream section gives long-term progress potential due to sturdy manufacturing progress.

Moreover, Nationwide Gas Gasoline inventory is presently moderately priced. Given an anticipated 3% progress in earnings over the intermediate time period, its 2.6% dividend yield, and its cheap valuation, we view the inventory as a “maintain” right here. We’ll improve it to “purchase” if it corrects and supplies an anticipated annual return of 10% or better.