We recently compiled a list of the Dividend Kings List: Top 15. In this article, we are going to take a look at where National Fuel Gas Company (NYSE:NFG) stands against the other dividend kings you should know about.
Dividend Kings are a distinguished group of companies that have achieved at least 50 consecutive years of dividend increases. While some of these companies are part of the S&P index, the two categories are not entirely overlapping. The appeal of Dividend Kings became especially clear after the disruptions caused by the COVID-19 pandemic in 2020. During this time, numerous companies either reduced or suspended their dividends, leaving income-focused investors disappointed. Many had assumed that dividend-paying stocks were inherently lower risk, only to face steep share price drops alongside payout cuts. However, Dividend Kings stand out for their remarkable consistency, boasting 50 years of uninterrupted dividend increases. This long history of reliable payouts provides a sense of stability, even in volatile market conditions.
Investors often gravitate toward firms with a track record of consistent dividend growth, as such companies tend to perform well in declining or stagnant markets. Even during periods of strong market performance, dividend growers have captured a significant share of the gains. Following a long-term dividend growth strategy can aid in compounding returns for investors. A T. Rowe Price report highlighted that, between 1985 and 2022, companies in the Russell index that consistently increased dividends outperformed the broader benchmark. Furthermore, these companies exhibited lower price volatility compared to the overall market.
Earning income through dividend stocks is a gradual process that requires patience and a commitment to long-term investing. These stocks are particularly suited for investors with a long-term horizon, as they have consistently outpaced inflation over time. According to data from Morningstar and Yale University’s Robert Shiller, since 1871, the market’s dividends per share have grown at an annualized rate 1.6 percentage points higher than inflation. Moreover, the gap between dividend growth and inflation has widened in recent years. Over the past 50 years, dividends have outpaced inflation by 2.5 percentage points annually, and in the last 20 years, the margin has grown to 4.6 percentage points per year.
During market rallies, dividend-growing stocks may underperform as investor enthusiasm and momentum often take precedence over fundamentals such as valuation and business quality. This trend has been especially noticeable in the recent past, with dividend stocks lagging behind the broader market. Nonetheless, maintaining a long-term strategy centered on dividend growth can be advantageous, as the benefits accumulate over time with each increase in payouts. Companies with solid fundamentals and robust financial stability are typically well-positioned to sustain and grow their dividends. In contrast, smaller or emerging businesses often prioritize reinvesting earnings into their operations to fuel growth. Given this, we will take a look at some of the best dividend kings with the highest yields.
Our Methodology:
To create this list, we examined a set of over 50 dividend king companies, recognized for consistently increasing dividends for 50 years or more. From this group, we selected companies with the highest dividend yields as of December 3 and organized them in ascending order based on their yield, from lowest to highest. We also measured hedge fund sentiment around each stock according to Insider Monkey’s database of 900 as of Q3 2024.
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 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A large oil and gas production plant with pipelines leading to tanker truck and storage tanks.
National Fuel Gas Company (NYSE:NFG)
Dividend Yield as of December 3: 3.29%
National Fuel Gas Company (NYSE:NFG) is a New York-based natural gas distribution company. It operates across the entire natural gas value chain, encompassing upstream, midstream, and downstream activities. While most companies specialize in one or two of these areas, few—typically the largest energy firms—are involved in all three, and even then, their focus often includes oil. This comprehensive approach makes National Fuel Gas a distinctive option for investors seeking exposure exclusively to natural gas. The stock has delivered a 23.4% return to shareholders year-to-date.
National Fuel Gas Company (NYSE:NFG) reported revenue of $372 million in fiscal Q4 2024, which showed a slight growth of 0.85% from the same period last year. The company successfully negotiated a multi-year settlement for its New York rate case, with approval anticipated in the near future. In the Exploration and Production (E&P) segment, capital efficiency showed notable improvement as non-acquisition capital expenditures dropped by $58 million, or 10%, compared to the previous year, while production rose by approximately 5% to reach 392.0 Bcf.
In FY24, National Fuel Gas Company (NYSE:NFG) generated over $1 billion in operating cash flow. In June this year, the company raised its dividend for the 54th consecutive year. Currently, it pays a quarterly dividend of $0.515 per share for a dividend yield of 3.29%, as of December 3.
Insider Monkey’s database of Q3 2024 showed that 21 hedge funds held stakes in National Fuel Gas Company (NYSE:NFG), which remained unchanged from the previous quarter. These stakes have a total value of nearly $214 million. With over 1.3 million shares, GAMCO Investors was the company’s leading stakeholder in Q3.
Overall NFG ranks 13th on our list of the dividend kings you should know about. While we acknowledge the potential of NFG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NFG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
