National Fuel Gas (NFG) is a dividend titan that does not receive the recognition it deserves. Undoubtedly because it is in the mundane utility sector so it is overlooked because it gets relegated to the widows-and-orphans bin, NFG stock should be on your buy list because it can provide you with a lifetime of passive income.

Although it’s not as sexy as AI and quantum computing, your portfolio should contain dividend growth stocks with a track record of returning value to investors. This powerhouse meets that requirement and more, and over the past year National Fuel Gas has outperformed the S&P 500 by better than five-to-one.

A Full-Spectrum Energy Stock
Although National Fuel Gas is a utility, it is really much more than that because it operates a diversified set of energy assets. Beyond serving utility services to customers in western New York and northwestern Pennsylvania, NFG also owns exploration and production assets that generate well over half of its revenue as well as having pipeline and storage operations that account for another 12%. The utility business is responsible for just one-fifth of revenue.

National Fuel Gas is a vertically integrated natural gas company with upstream, midstream, and downstream assets, though the various segments perform differently over time due to pricing. The production arm of the business, for example, is more susceptible to commodity pricing, which can impact its earnings, while the utility portion tends to be more stable. Yet together they form a cohesive unit that has rewarded investors for decades.

NFG has continuously paid a dividend to shareholders for 121 years and has consistently raised the payout every year for 53 years, making it a Dividend King. The dividend yields 2.6% annually and it has a compound annual growth rate of 3% over the past decade. That’s not an especially rapid increase, but it is reliable and keeps pace with inflation, which is important for income investors.

It is one of the reasons investors look to utility stocks for income and why they were considered essential for the most vulnerable of investors.

Key Takeaways
While NFG stock trades in the middle of the integrated oil and gas industry with a forward P/E ratio of 9, it’s at the lower end of the midstream sector and the very low end of the utility field.

Income investors looking for greater exposure to the energy markets, and who seek out companies that produce consistent cash flows should consider adding this member of the dividend royalty to their portfolios.

Dividend growth stocks have proved to be the best performers over time, never suffering a losing decade for the past 100 years. Even through recessions and depressions, two world wars, and a pandemic, dividend growers have outperformed the market.

You’re not going to get dramatic growth spurts out of National Fuel Gas, though its stock is up 50% over the past year. What you will find is a stalwart addition that can offer a steady stream of income for the long-term.

— Rich Duprey

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Source: Money Morning