UGI Corporation: Steady Dividend History Likely Has Future Potential

Oct. 27, 2022 7:46 AM ETUGI Corporation (UGI)6 Comments
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Summary

  • Invest in UGI Corporation with a high likelihood of maintaining growing dividend payments (low downside - high upside).
  • Investors should be wary of other variables that may deteriorate the business and sector over the next 30 years such as the trends in energy investments and legislation.
  • Using historical data and a Monte Carlo simulation, UGI Corporation is fairly valued with good upside, depending on investor expectations.
  • A Sensitivity Analysis for UGI Corporation allows for visualizing a margin of safety and selecting "Buy" prices from multiple potential scenarios.

UGI Corporation headquarters in King of Prussia, Pennsylvania, USA.

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Thesis

As a dividend investor, the goal is to invest in firms that have a high likelihood of maintaining growing dividend payments throughout the investor's lifespan. UGI Corporation (NYSE:UGI) is a dividend Aristocrat and is likely to continue

UGI YTD returns

Figure 1. UGI YTD vs S&P 500 (Seeking Alpha)

UGI total return vs. S&P 500 since 1992

Figure 2. UGI total return vs. S&P 500 since 1992 (Seeking Alpha)

UGI Dividend Grade

Figure 3. UGI Dividend Grade (Seeking Alpha)

UGI historical dividend frequency distribution

Figure 4. UGI historical dividend frequency distribution (Author)

UGI annual dividend and dividend growth rate

Figure 5. UGI annual dividend and dividend growth rate (Author)

UGI Monte Carlo dividend growth rate summary

Figure 6. UGI Monte Carlo dividend growth rate summary (Author)

UGI dividend growth rate summary

Figure 7. UGI dividend growth rate summary (Author)

CAGR Formula

Figure 8. CAGR formula (Investopedia)

Gordon Growth Model

Figure 9. Gordon Growth Model (Investopedia)

UGI sensitivity analysis

Figure 10. UGI sensitivity analysis (Author)

This article was written by

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Our goal at Six-Five Research is to incorporate both quantitative and qualitative analysis into better investment decisions. We focus on value, cash flow, competitive environments, business strategy, macro-economics, descriptive statistics, statistical methods, and theorizing potential risk scenarios. We invest by attempting to understand a range of potential outcomes through analysis.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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