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4 Reasons to Add Northwest Natural (NWN) to Your Portfolio

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Zacks Equity Research
·3 min read
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Northwest Natural Holding Company NWN — through its subsidiaries — provides natural gas, water and wastewater services to customers in the United States. The company purchases natural gas from multiple sources, which protect it against regional supply disruptions and help it take advantage of price differentials.

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 2021 and 2022 earnings per share is pegged at $2.56 and $2.60, respectively. The 2021 and 2022 estimates indicate year-over-year growth of 11.3% and 1.8%, respectively. Estimates for 2021 has been unchanged but the same for 2022 has increased 0.8% in the past 60 days.

The Zacks Consensus Estimate for 2021 and 2022 revenues is pegged at $855 million and $900.3 million, indicating year-over-year growth of 10.5% and 5.4%, respectively.

Regular Dividend Hike

Currently, the company has a dividend yield of 3.62%, higher than the industry’s 2.85%. It has increased annual dividend rate for 65 consecutive years. The company’s stable performance ensures an increase in annual dividend payment for shareholders.

Regular Investments & Steady Customer Growth

Northwest Natural makes consistent investments to upgrade and maintain the existing infrastructure, as well as expand operations. The company anticipates investing $300 million in 2021 and in the range of $1-$1.2 billion during the 2021-2025 time period in natural gas operations. These investments will increase the reliability of gas services and enable it to serve an increasing customer base effectively. The company expects this systematic investment to drive 4-6% rate base growth over the long term.

It has been registering a consistent increase in gas utility customer volumes over the past 14 years. At the end of 2020, its customer volumes increased 1.5% year over year. The company expects to register customer growth of more than 1.4% annually over the long term.

Focus on Net Zero

One of the primary objectives of the company is to attain carbon neutrality by 2050. Northwest Natural plans to achieve this target through extensive usage of renewable sources that do not contribute new carbon to the atmosphere, and partnership with cleaner electric systems to create seasonal and peak energy storage.

Price Performance

In the past three months, the stock has gained 22.3% compared with the industry’s growth of 17.2%.

Other Stocks to Consider

Other top-ranked stocks in the same sector include Black Hills Corporation BKH, Spire Inc. SR and NiSource Inc. NI, each currently having a Zacks Rank #2.

Black Hills, Spire and NiSource pay regular dividends, ensuring steady income for investors. The current dividend yield of Black Hills, California Water Services and NiSource is 3.39%, 3.54%, and 3.66%, respectively.

The Zacks Consensus Estimate for 2021 earnings for Black Hills and NiSource has moved up 1.3% and 0.8%, respectively, in the past 60 days. In the same frame, the Zacks Consensus Estimate for fiscal 2021 earnings of Spire has moved up 1.7%.

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NiSource, Inc (NI) : Free Stock Analysis Report

Black Hills Corporation (BKH) : Free Stock Analysis Report

Northwest Natural Gas Company (NWN) : Free Stock Analysis Report

Spire Inc. (SR) : Free Stock Analysis Report

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Zacks Investment Research