One Gas Inc. (OGS:NYE) is a regulated natural gas distribution utility, which is the least risky business model in the sector. The company serves over 2 million customers in Oklahoma, New Mexico, and Texas, and has a more than 100-year history.
Moreover, the company has a solid balance sheet with a low debt-to-equity ratio and solid liquidity. It also has a strong track record of dividend growth, having increased its dividend for more than 20 consecutive years. With a current dividend yield of 3.5%, it is one of the most attractive dividend payers in the sector.
The company’s dividend growth prospects remain intact, as its regulated business model, solid balance sheet, and low debt-to-equity ratio make it well-positioned to continue to increase its dividend payout over time. Moreover, the company is expected to benefit from the increasing demand for natural gas following the recent investments in its infrastructure.
Given the current environment of low yields, rising inflation, and uncertain markets, OGS Stock (OGS:NYE) stands out as an attractive option for investors looking for growing income over time with limited risk.
Correlation Between Earnings & Dividend Growth:
ONE Gas’ moat, distribution business model, and upcoming rate hikes make it an attractive long–term dividend growth stock. The company’s impressive track record of dividend increases, as well as its management’s reliable forecast of a mid–single–digit dividend growth rate over the next few years, make it an attractive investment for income–seeking investors.
Furthermore, ONE Gas’ yield of 3.2% is higher than the average yield of dividend growth stocks in the Utility sector, making it even more appealing to dividend investors.
Should You Buy OGS Stock?
Analysts are mildly bullish on the OGS stock, as indicated by the average rating of Hold. This consensus rating has remained unchanged over the past three months.
The Hold consensus rating also includes one Buy rating, four Holds, and one Sell rating. Given that the average price target of $79.06 implies a 4.7% downside potential, analysts are not particularly bullish on the dividend growth stock.
Takeaway:
Wall Street may not be as enthusiastic as I am regarding ONE Gas‘ investment case, however, the company‘s reliable and predictable features remain remarkable.
Our research has demonstrated that few companies provide such specific and long–term outlooks; ONE Gas is an exception, as it offers a reliable and predictable medium–term return potential. This is what makes ONE Gas a desirable low–volatility dividend growth stock.
