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MDU Resources (MDU) Rewards Shareholders With 4% Dividend Hike
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MDU Resources Group (MDU - Free Report) announced that its board of directors has approved a 4% increase in its quarterly dividend rate. The company has paid uninterrupted dividends for 86 years. The new dividend rate will be 13 cents per share compared with the previous quarter’s 12.5 cents, payable on Oct 1, 2024, to stockholders of record as of Sept 12.
This increase resulted in an annualized dividend of 52 cents per share compared with the previous level of 50 cents. The board continues to target a long-term dividend payout ratio of 60-70% of regulated energy delivery earnings. MDU’s current dividend yield is 2.02%, higher than the Zacks S&P 500 composite's average of 1.27%.
Can MDU Sustain Dividend Hikes?
MDU Resources is focused on safely meeting customer demand by upgrading and expanding its electric and natural gas infrastructure. The company continues with its several expansion projects, which are expected to add more than 300 million cubic feet per day of incremental capacity upon their completion in 2024, subject to regulatory approvals.
MDU expects its capital expenditures to be $2.7 billion in the 2024-2028 period. These investments should further increase the reliability of its services and enable it to effectively serve an increasingly large customer base. The company’s compound annual growth rate target for the next five years is in the 6-7% range.
The company is likely to continue to witness 1-2% customer growth in the electric and natural gas segments annually through 2026. The construction of Heskett Station Unit IV, the 88-megawatt natural gas-fired combustion turbine in Mandan, ND, has been completed. It came into service in July 2024. This should further boost MDU’s demand and enhance its earnings.
MDU Resources has the potential to expand and improve even further, which suggests that management will have sufficient funds to continue with its shareholder-friendly initiatives in the future.
Legacy of Dividend Payment
Companies involved in utility services generally have stable operations and earnings. Consistent performance, regulated returns and the ability to generate cash flows allow utilities to reward shareholders with regular dividends.
In the past few months, National Fuel Gas Company (NFG - Free Report) , Chesapeake Utilities Corp. (CPK - Free Report) and The Southern Company (SO - Free Report) have raised their quarterly dividend rate by 4%, 8.5% and 2.9%, respectively.
The Zacks Consensus Estimate for National Fuel Gas’ fiscal 2024 earnings has increased 10.1% in the past 60 days to $5.13 per share. NFG’s current dividend yield is 3.49%.
The Zacks Consensus Estimate for Chesapeake Utilities’ 2024 earnings is pegged at $5.39 per share, implying a year-over-year increase of 1.5%. CPK’s current dividend yield is 2.23%.
The Zacks Consensus Estimate for Southern Company’s 2024 earnings has increased 0.3% in the past 60 days to $4.01 per share. SO’s current dividend yield is 3.3%.
Price Performance
In the past six months, MDU Resources’ shares have risen 18.4% compared with the industry’s growth of 12.1%.
Image: Bigstock
MDU Resources (MDU) Rewards Shareholders With 4% Dividend Hike
MDU Resources Group (MDU - Free Report) announced that its board of directors has approved a 4% increase in its quarterly dividend rate. The company has paid uninterrupted dividends for 86 years. The new dividend rate will be 13 cents per share compared with the previous quarter’s 12.5 cents, payable on Oct 1, 2024, to stockholders of record as of Sept 12.
This increase resulted in an annualized dividend of 52 cents per share compared with the previous level of 50 cents. The board continues to target a long-term dividend payout ratio of 60-70% of regulated energy delivery earnings. MDU’s current dividend yield is 2.02%, higher than the Zacks S&P 500 composite's average of 1.27%.
Can MDU Sustain Dividend Hikes?
MDU Resources is focused on safely meeting customer demand by upgrading and expanding its electric and natural gas infrastructure. The company continues with its several expansion projects, which are expected to add more than 300 million cubic feet per day of incremental capacity upon their completion in 2024, subject to regulatory approvals.
MDU expects its capital expenditures to be $2.7 billion in the 2024-2028 period. These investments should further increase the reliability of its services and enable it to effectively serve an increasingly large customer base. The company’s compound annual growth rate target for the next five years is in the 6-7% range.
The company is likely to continue to witness 1-2% customer growth in the electric and natural gas segments annually through 2026. The construction of Heskett Station Unit IV, the 88-megawatt natural gas-fired combustion turbine in Mandan, ND, has been completed. It came into service in July 2024. This should further boost MDU’s demand and enhance its earnings.
MDU Resources has the potential to expand and improve even further, which suggests that management will have sufficient funds to continue with its shareholder-friendly initiatives in the future.
Legacy of Dividend Payment
Companies involved in utility services generally have stable operations and earnings. Consistent performance, regulated returns and the ability to generate cash flows allow utilities to reward shareholders with regular dividends.
In the past few months, National Fuel Gas Company (NFG - Free Report) , Chesapeake Utilities Corp. (CPK - Free Report) and The Southern Company (SO - Free Report) have raised their quarterly dividend rate by 4%, 8.5% and 2.9%, respectively.
The Zacks Consensus Estimate for National Fuel Gas’ fiscal 2024 earnings has increased 10.1% in the past 60 days to $5.13 per share. NFG’s current dividend yield is 3.49%.
The Zacks Consensus Estimate for Chesapeake Utilities’ 2024 earnings is pegged at $5.39 per share, implying a year-over-year increase of 1.5%. CPK’s current dividend yield is 2.23%.
The Zacks Consensus Estimate for Southern Company’s 2024 earnings has increased 0.3% in the past 60 days to $4.01 per share. SO’s current dividend yield is 3.3%.
Price Performance
In the past six months, MDU Resources’ shares have risen 18.4% compared with the industry’s growth of 12.1%.
Image Source: Zacks Investment Research
Zacks Rank
MDU currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.