Yahoo Finance National Fuel Gas (NYSE:NFG) Has Announced That It Will Be Increasing Its Dividend To $0.515
The board of National Fuel Gas Company (NYSE:NFG) has announced that the dividend on 15th of July will be increased to $0.515, which will be 4.0% higher than last year's payment of $0.495 which covered the same period. This takes the annual payment to 3.6% of the current stock price, which is about average for the industry.
See our latest analysis for National Fuel Gas
National Fuel Gas' Payment Has Solid Earnings Coverage
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. National Fuel Gas is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.
Looking forward, earnings per share is forecast to rise by 42.3% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 28%, which is in the range that makes us comfortable with the sustainability of the dividend.
National Fuel Gas Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of $1.50 in 2014 to the most recent total annual payment of $1.98. This implies that the company grew its distributions at a yearly rate of about 2.8% over that duration. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.
National Fuel Gas Could Grow Its Dividend
The company's investors will be pleased to have been receiving dividend income for some time. National Fuel Gas has seen EPS rising for the last five years, at 8.2% per annum. National Fuel Gas definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
In Summary
In summary, while it's always good to see the dividend being raised, we don't think National Fuel Gas' payments are rock solid. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would probably look elsewhere for an income investment.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 2 warning signs for National Fuel Gas that you should be aware of before investing. Is National Fuel Gas not quite the opportunity you were looking for? Why not check out our selection of top 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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