Yahoo Finance ONE Gas (OGS) Increases Quarterly Dividend Rate by 7.1% - Analyst Blog
ONE Gas, Inc. (OGS) declared a 7.1% sequential increase in the quarterly dividend rate. The revised dividend of 30 cents per share will be effective for the first quarter of 2015 and distributed on March 2, 2015, to shareholders of record as on Feb 20. This marks the first rate revision by ONE Gas.
The increased rate raises the company’s annual dividend to $1.20 per share, which reflects a yield of 2.6% based on the closing share price of $45.38 on Jan 20, 2015.
ONE Gas’ first dividend was paid on May 15, 2014. The company’s attempt to maximize shareholder wealth is evident from its projected targets. The company projects average dividend growth in the range of 6% to 8% annually from 2014 to 2019. The company also aims a payout ratio of 55% to 65% of the net income between 2014 and 2019, subject to board approval.
ONE Gas pays dividends to its shareholders at regular intervals. On Nov 14, 2014, the company paid 28 cents per share of common stock to its shareholders. In the first nine months of 2014, the company paid around $29.1 million as dividend. This practice will allow ONE Gas to attract more investors to the stock.
Tulsa, OK-headquartered ONE Gas, previously a unit of ONEOK Inc. (OKE), is a regulated utility provider. In Jan 2014, the company officially separated from ONEOK and has been operating independently ever since. ONE Gas offers natural gas distribution services to over 2 million residential, commercial, industrial, transportation and wholesale customers. The company has a significant presence in Kansas, Oklahoma and Texas.
ONE Gas plans to invest $300 million in 2015 as capital expenditure. This includes a significant portion allocated for system replacement and integrity ventures. Disciplined investments in infrastructure projects will allow the company to serve more customers.
A stable liquidity profile supports ONE Gas’ systematic dividend payouts. As of Sep 30, 2014, the company’s cash balance stood at around $59.7 million compared with roughly $3.2 million as of Dec 31, 2013. Cash flow from operating activities in the first nine months of 2014 amounted to approximately $250 million.
Systematic investments in growth projects, coupled with stable customer growth, are expected to provide steady cash inflows to ONE Gas, thereby meeting its fund requirement for dividend payments.
ONE Gas currently carries a Zacks Rank #2 (Buy). Other stocks worth considering in the same industry include New Jersey Resources Corp. (NJR) and Southwest Gas Corp. (SWX), each sporting a Zacks Rank #1 (Strong Buy).
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