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MDU Resources (MDU) Offers Investors 2.3% Higher Dividend

The MDU Resources Group Inc. MDU announced that its board of directors has approved a 2.3% increase in the quarterly dividend rate. The revised dividend will be 22.25 cents, payable on Jan 1, 2023, to shareholders of record at the close of business on Dec 8, 2022.The annualized dividend rate of the company comes to 89 cents, while the current dividend yield is 2.91%, better than the Zacks S&P 500 Composite’s yield of 1.61%.

Utilities With History of Dividend Hikes

MDU Resources belongs to an exclusive group of companies that raise dividend rates consecutively. The current hike marks 32 consecutive years of dividend increases. The company has been distributing dividends for the last 85 years.

MDU Resources is not the only company with a long history of consistent dividend payments. Utilities like Consolidated Edison, Inc. ED and The York Water Company YORW have also been rewarding their shareholders with dividend payments for more than 100 years without fail.

Consolidated Edison and York Water Company’s current dividend yields are 3.38% and 1.75%, respectively, which are better than the Zacks S&P 500 Composite’s dividend yield. The Zacks Consensus Estimate for Consolidated Edison and York Water Company’s 2022 earnings per share reflects a year-over-year increase of 3.4% and 6.2%, respectively.

Can the Company Continue its Dividend Run?

MDU Resources’ two-platform business model — regulated energy delivery platform and a construction materials and services platform — helps to balance out such seasonality-related risks that adversely impact demand. Steady earnings generation enables the company to distribute regular dividends to its shareholders.

MDU Resources is likely to continue witnessing 1-2% customer growth in the electric and natural gas segments annually through 2026. The steady increase in customer base is also increasing demand for services offered by the company, boosting its performance.

MDU Resources’ Pipeline business continues to benefit from higher volumes of natural gas transported through its systems. MDU is working on a number of pipeline expansion projects across its system, including the previously announced Wahpeton Expansion project, which is expected to be in service in late 2024, subject to regulatory approval.

The utility has also entered into long-term customer agreements for four additional projects, and the Line Section 7 Expansion, the first of these projects, went into operation on Aug 1, 2022, increasing system capacity by 6.7 million cubic feet (Mmcf) per day.

The expanding operation of MDU through acquisition and organic means, coupled with an increasing customer base, will enable the company to continue with its annual dividend increase over the long run.

Price Performance

In the past six months, MDU Resources’ shares have gained 14% against the industry’s decline of 2.2%.

 

Zacks Investment Research
Zacks Investment Research


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Zacks Rank & Key Pick

MDU Resources currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the same industry worth adding is Northwest Natural Holding Company NWN. Northwest Natural Holding currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Northwest Natural Holding’s current dividend yield is 3.98%, which is better than its industry average of 2.9%. The Zacks Consensus Estimate for Northwest Natural Holding’s 2022 earnings estimate moved up by 2% to $2.55 per share in the past 60 days.

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Consolidated Edison Inc (ED) : Free Stock Analysis Report

The York Water Company (YORW) : Free Stock Analysis Report

Northwest Natural Gas Company (NWN) : Free Stock Analysis Report

MDU Resources Group, Inc. (MDU) : Free Stock Analysis Report

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Zacks Investment Research