By nature, utilities are boring businesses. Providing electricity, natural gas, and water for customers isn’t very exciting. However, it’s a steady niche that can provide decades of cash flow. No wonder they are called “widow-and-orphan” stocks. For firms that do it right, like our latest Best Dividend Capture Pick, there can also be a touch of growth. All of that can lead to years’ worth of dividend increases and shareholder buybacks.
You can check out the Best Dividend Capture Stocks List to explore all the stocks.
The win for our pick lies in the kind of utility it is. Our pick operates as a distributor of natural gas, propane, and liquefied petroleum gas (LPG) across the United States and select international markets. All in all, our pick’s assets and businesses have around 2.5 million customers in 17 different countries and span a variety of midstream, marketing, and utility assets. It’s a steady niche that helps drive earnings, cash flows, and dividends for its shareholders. Our pick has been paying a dividend since 1882 and has consistently raised that payout for nearly 40 years straight.
On the back of those steady-eddy natural gas distribution assets is some pretty decent growth.
Our pick has continued to use M&A over its history to buy out smaller and mid-sized rivals within its core operating areas, as well as to gain new footholds in additional international markets. Additionally, natural gas is quickly being seen as a great transition fuel, bridging the gap between traditional fossil fuels and renewables. This has added additional demand and growth for its midstream and distribution assets. Finally, new pipeline build-outs and infrastructure plans have added incremental cash flows to its bottom line.
The combination of steady assets plus growth has made our pick a wonderful dividend capture play. A dividend capture strategy involves buying a stock before its ex-dividend date and then selling it after it has recovered the payout. With an ex-dividend date of Monday, June 16, our pick is primed for the strategy, as is evident from its historical track record of a recovery period within an average of 10.7 days after going ex-dividend.
For investors looking for a quick total return of income and capital appreciation, our latest natural gas pick could be a lucrative option.
