Domestic production supplies most of the natural gas consumption in the United States. Natural gas prices are changing rapidly due to changes in supply and demand. Starting with the end of 2008, there had been a significant decline in natural gas prices because of economic crisis and decline in natural gas consumption. In 2010 Natural Gas consumption in United States was 24,134 Billion Cubic Meters, an increase of 5.7% compared with a year ago. The annual average consumer price of Natural gas in 2010 was $11.19 per thousand cubic feet, a decrease of 7.8% compared with a year ago. For the near future, economic growth in the world can drive up natural gas demand and prices. The projections show that industrial natural gas demand will increase from 7.3 trillion cubic feet in 2009 to 9.4 trillion cubic feet in 2020.
We prepared a list of fifteen gas utility companies which pay fat dividend checks regularly. All companies in this list have a dividend yield of at least 3.5%. These fifteen stocks returned 13.18% (including dividends) during the past 12 months, beating government bonds by a large margin.
Company | Market Cap | P / E | Payout Ratio | Return | Dividend Yield |
1- Suburban Propane Partners (SPH) | 2.04B | 18.6 | 109.00% | 0.51% | 6.10% |
2- AmeriGas Partners (APU) | 2.71B | 17.53 | 127.00% | 24.21% | 6.05% |
3- National Grid (NGG) | 30.18B | 10.61 | 68.00% | 7.43% | 5.84% |
4- Integrys Energy (TEG) | 3.85B | 17.41 | 96.00% | 14.57% | 5.48% |
5- Gas Natural (EGAS) | 66.81M | 7.33 | 32.00% | 15.63% | 4.83% |
6- AGL Resources (AGL) | 3.00B | 12.83 | 59.00% | 7.55% | 4.55% |
7- Laclede Gas (LG) | 860.69M | 15.69 | 65.00% | 16.24% | 4.28% |
8- Delta Natural Gas (DGAS) | 103.42M | 15.63 | 68.00% | 12.65% | 4.25% |
9- Atmos Energy Corp (ATO) | 3.11B | 17.07 | 67.00% | 23.78% | 4.02% |
10- RGC Resources (RGCO) | 72.80M | 15.8 | 65.00% | 10.47% | 3.98% |
11- WGL Holdings (WGL) | 1.95B | 15.19 | 60.00% | 7.66% | 3.97% |
12- Transcananda Corp (TRP) | 27.79B | 21.89 | 88.00% | 14.04% | 3.88% |
13- Piedmont Natural Gas (PNY) | 2.14B | 19 | 72.00% | 12.82% | 3.83% |
14- Northwest Natural Gas (NWN) | 1.26B | 16.8 | 62.00% | 0.11% | 3.69% |
15- Nicor (GAS) | 2.41B | 17.53 | 62.00% | 30.02% | 3.50% |
Five of these stocks managed to beat the market. Nicor had the best performance in this list during the last twelve months. Nicor has gained 41% in the last twelve months, vs. 14.9% gain for the S&P 500 (SPY). T. Boone Pickens' oil and gas commodities fund distributed about $2.8 billion to investors since he started it in 1997. Jim Rogers who is extremely bullish on commodities doesn’t agree with T. Boone Pickens that natural gas will replace oil anytime soon.
We, think inflation is a serious threat in the US and current yields of government bonds don’t provide enough compensation for their excessive risks. We believe stable, dividend yielding stocks provide a much better opportunity for conservative investors. A well diversified portfolio of these stocks should be able to beat the 10-year government bonds over the next 10 years.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
