National Fuel Gas' (NYSE:NFG) Dividend Will Be Increased To $0.495
National Fuel Gas Company (NYSE:NFG) will increase its dividend on the 14th of July to $0.495, which is 4.2% higher than last year's payment from the same period of $0.475. The payment will take the dividend yield to 3.7%, which is in line with the average for the industry.
Check out our latest analysis for National Fuel Gas
National Fuel Gas' Dividend Is Well Covered By Earnings
While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. However, based ont he last payment, National Fuel Gas was earning enough to cover the dividend pretty comfortably. The business is earning enough to make the dividend feasible, but the cash payout ratio of 85% shows that most of the cash is going back to the shareholders, which could constrain growth prospects going forward.
Over the next year, EPS is forecast to fall by 19.7%. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 39%, which is comfortable for the company to continue in the future.
National Fuel Gas Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of $1.46 in 2013 to the most recent total annual payment of $1.90. This means that it has been growing its distributions at 2.7% per annum over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.
We Could See National Fuel Gas' Dividend Growing
Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that National Fuel Gas has grown earnings per share at 6.3% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for National Fuel Gas' prospects of growing its dividend payments in the future.
Our Thoughts On National Fuel Gas' Dividend
Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. Overall, we don't think this company has the makings of a good income stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 2 warning signs for National Fuel Gas you should be aware of, and 1 of them is concerning. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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