We recently published a list of the 10 Cheap Quarterly Dividend Stocks to Buy Now. In this article, we are going to take a look at where National Fuel Gas Company (NYSE:NFG) stands against other overlooked dividend stocks.
In the current market environment, investors are looking to seek stable income as a way to protect themselves against a possible recession. Business surveys from ISM and S&P Global have highlighted increasing concerns among companies about the impact of new tariffs, with the S&P Global survey projecting an annual GDP growth rate of only around 1% for the first quarter. While most forecasts predict growth of 0.5%, some nowcasting models indicate the possibility of a contraction. Markets are particularly focused on how the US administration will address the growing recession risks, especially regarding its approach to tariffs and trade agreements.
In addition, despite President Donald Trump’s decision to pause a significant tariff increase on multiple countries, Americans continue to fear a recession and rising inflation. Consumer sentiment dropped 8% in April compared to the previous month, reaching a final reading of 52.2, according to the University of Michigan’s latest survey. This level of sentiment marked the fourth-lowest in records dating back to 1952. Joanne Hsu, the survey’s director, made the following comment in the release:
“While this month’s deterioration was particularly strong for middle-income families, expectations worsened for vast swaths of the population across age, education, income, and political affiliation. Consumers perceived risks to multiple aspects of the economy, in large part due to ongoing uncertainty around trade policy and the potential for a resurgence of inflation looming ahead.”
Analysts suggest that investors worried about an economic slowdown might want to consider investing in dividend-stock funds, as these stocks have historically performed relatively well during recessions. Companies that pay dividends usually generate enough excess cash flow to sustain payments year after year. Dividend programs are often seen as a sign of strong financial discipline, as companies committed to paying dividends are generally hesitant to alter their policies. According to a Morningstar report, dividend-paying stocks outperformed the broader market during the recessions that began in July 1981, March 2001, and December 2007, with the stocks doing significantly better in two of those periods. However, they slightly underperformed during the short recession of 1980, which followed the Federal Reserve’s interest rate hikes to control the high inflation of the 1970s.
Within dividend investing, dividend growth stocks have outperformed those with high yields. A Morningstar report noted that dividend growth funds provided the most appealing long-term returns, as seen in the data presented. These funds not only offered the highest total returns but also achieved the best balance of risk and return, as measured by the Sharpe ratio. The report also pointed out that dividend growth strategies have generally performed the best during recessions. Except for 2001, when their greater exposure to technology stocks became a disadvantage, dividend-growth funds performed better than other dividend categories during recent recessionary periods.
A large oil and gas production plant with pipelines leading to tanker truck and storage tanks.
Our Methodology
For this list, we screened for dividend companies with strong dividend histories and yields of at least 1%, as of April 27. From that list, we picked dividend stocks with forward P/E ratios below 20, as of April 27. The low price-to-earnings ratio shows that they are traded below their intrinsic value. The stocks are ranked in descending order of their P/E multiples.
At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
National Fuel Gas Company (NYSE:NFG)
Forward P/E Ratio as of April 27: 11.55
National Fuel Gas Company (NYSE:NFG) ranks seventh on our list of the best cheap quarterly dividend stocks to invest in. It is a diversified energy company that engages in the production, gathering, transportation, storage, and distribution of natural gas. The stock is outperforming the broader market in 2025, surging by nearly 27% since the start of the year. This performance is driven by a string of better-than-expected earnings results and a major increase in its fiscal 2025 outlook.
In fiscal Q1 2025, National Fuel Gas Company (NYSE:NFG) reported revenue of $549.4 million, marking a 4.59% increase compared to the same period last year. The Pipeline & Storage segment delivered an $8.4 million (35%) rise in net income, largely driven by higher rates put in place after the Supply Corporation rate case settlement that took effect on February 1, 2024. The Utility segment also posted strong results, with net income up by $5.9 million (22%), helped by a three-year rate agreement in its New York service area.
National Fuel Gas Company (NYSE:NFG) is a strong dividend payer, having paid consistent dividends to shareholders for the past 121 years. In addition, the company is a Dividend King, with 54 consecutive years of dividend growth under its belt. Supported by higher natural gas prices and improved performance across its segments, National Fuel Gas Company raised its fiscal 2025 adjusted EPS guidance to a range of $6.50 to $7.00. The company also maintained a strong financial position, generating over $220 million in operating cash flow during the quarter. It offers a quarterly dividend of $0.515 per share and has a dividend yield of 2.64%, as of April 27.
Overall, NFG ranks 7th on our list of the best cheap quarterly dividend stocks. While we acknowledge the potential of NFG as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than NFG but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.
