Up to date on March third, 2025 by Felix Martinez
The Dividend Aristocrats are a bunch of shares within the S&P 500 Index with 25+ years of consecutive dividend will increase. These corporations have high-quality enterprise fashions which have stood the take a look at of time and proven a outstanding means to boost dividends yearly whatever the financial system.
Now we have compiled an inventory of all 69 Dividend Aristocrats, together with related monetary metrics like dividend yield and P/E ratios. You possibly can obtain the total Dividend Aristocrats checklist by clicking on the hyperlink beneath:
Disclaimer: Certain Dividend is just not affiliated with S&P World in any method. S&P World owns and maintains The Dividend Aristocrats Index. The data on this article and downloadable spreadsheet is predicated on Certain Dividend’s personal assessment, abstract, and evaluation of the S&P 500 Dividend Aristocrats ETF (NOBL) and different sources, and is supposed to assist particular person traders higher perceive this ETF and the index upon which it’s based mostly. Not one of the info on this article or spreadsheet is official knowledge from S&P World. Seek the advice of S&P World for official info.
The checklist of Dividend Aristocrats is diversified throughout a number of sectors, together with shopper items, financials, industrials, and healthcare. Surprisingly, the utility sector is underrepresented.
Solely three utility shares are on the checklist of Dividend Aristocrats: Consolidated Edison (ED), NextEra Power (NEE), and Atmos Power (ATO).
Solely three utilities are on the checklist, which can come as a shock, particularly since utilities are extensively considered regular dividend shares. This text will focus on Atmos Power’s path to changing into a Dividend Aristocrat.
Enterprise Overview
Atmos Power was fashioned in 1906 in Texas. Since then, it has grown organically and thru mergers. At this time, Atmos Power distributes and shops pure fuel in eight states, serving over 3 million clients.
As well as, Atmos owns about 5,700 miles of pure fuel transmission strains. The utility ought to generate about $4.8 billion in income final 12 months. The corporate serves over 3 million pure fuel clients in eight states.
Supply: Investor Presentation
Atmos posted first quarter earnings on February fifth, 2025. The corporate reported reported fiscal 2025 Q1 earnings of $2.23 per diluted share, with a web revenue of $351.9 million. Capital expenditures reached $891.2 million, with 86% devoted to security and reliability. The corporate maintains sturdy financials, with 60.3% fairness capitalization and $5.2 billion in liquidity, alongside $150.5 million in annualized regulatory outcomes.
The corporate reaffirmed its fiscal 2025 earnings steerage of $7.05–$7.25 per diluted share and expects $3.7 billion in capital expenditures. The Board declared a quarterly dividend of $0.87 per share, elevating the annual dividend to $3.48, an 8.1% enhance from 2024.
CEO Kevin Akers highlighted the corporate’s ongoing dedication to security, reliability, and modernization, crediting its 5,300 workers for delivering sturdy outcomes that profit clients and communities.
Development Prospects
Earnings progress throughout the utility trade sometimes mimics GDP progress, plus a few proportion factors. Nevertheless, we count on Atmos Power to proceed outperforming this pattern attributable to its deal with capital funding in its regulated operations, a constructive regulatory setting in Texas, and inhabitants progress.
In consequence, the corporate ought to profit from sturdy fee base progress, which is able to generate annual earnings per share progress in accordance with administration’s 6%—8% steerage.
New clients, fee will increase, and aggressive capital expenditures are Atmos Power’s progress drivers. One good thing about working in a regulated trade is that utilities are permitted to boost charges regularly, which just about assures a gradual stage of progress.
Supply: Investor Presentation
The corporate’s main danger is its means to realize well timed and constructive regulatory fee changes. If it achieves decrease than anticipated allowed returns, this might considerably hurt earnings.
Nevertheless, we consider Atmos can obtain a minimum of 7% annual EPS progress through continued enhancements in gross margin, reductions in working prices as a proportion of income, and top-line progress by way of acquisitions and natural buyer progress.
The corporate continues to file favorable fee instances with its numerous localities, which additionally present for small income will increase over time, as we noticed once more in fiscal 2024 full–12 months outcomes.
Aggressive Benefits & Recession Efficiency
Atmos Power’s major aggressive benefit is the utility trade’s excessive regulatory hurdles. Gasoline service is critical and very important to society. In consequence, the trade is extremely regulated, making it just about unattainable for a brand new competitor to enter the market. This gives nice certainty to Atmos Power and its annual earnings.
One other aggressive benefit is the corporate’s secure enterprise mannequin and sound steadiness sheet, giving it a sexy price of capital. This permits it to fund accretive acquisitions and progress capital expenditures, driving outsized earnings per share progress.
As well as, the utility enterprise mannequin is extremely recession-resistant. Whereas many corporations skilled giant earnings declines in 2008 and 2009, Atmos Power’s earnings per share saved rising. Earnings-per-share through the Nice Recession are proven beneath:
- 2007 earnings-per-share of $1.91
- 2008 earnings-per-share of $1.99 (4% progress)
- 2009 earnings-per-share of $2.07 (4% progress)
- 2010 earnings-per-share of $2.20 (6% progress)
The corporate nonetheless generated wholesome progress even through the worst of the financial downturn. Outcomes remained resilient and continued to develop through the pandemic, demonstrating Atmos’ belongings’ mission-critical nature.
This resilience has allowed Atmos Power to proceed growing its dividend annually throughout these unfavorable market environments.
Valuation & Anticipated Returns
Atmos Power is predicted to earn $7.20 this 12 months. Based mostly on this, the inventory trades with a price-to-earnings ratio of 21.3x. That is above our honest worth estimate of 19x earnings, and above the 10-year common price-to-earnings ratio for the inventory.
In consequence, Atmos Power shares seem like overvalued. If the inventory valuation compresses from 21.3 to 19 over the following 5 years, the corresponding a number of compression would lower annual returns by 1.6%. This might be a slight headwind for future returns.
Luckily, the inventory might nonetheless present constructive returns to shareholders, by way of earnings progress and dividends. We count on the corporate to develop earnings by 7% per 12 months over the following 5 years.
As well as, the inventory has a present dividend yield of two.3%. ATO has elevated its dividend for 41 consecutive years.
Placing all of it collectively, Atmos Power’s whole anticipated returns might appear to be the next:
- 7% earnings progress
- 1.6% P/E a number of compression
- 2.3% dividend yield
Added up, Atmos Power is predicted to generate 7.7% annualized whole returns over the following 5 years, which doesn’t make the inventory enticing for traders serious about dividend progress and whole returns.
The dividend yield is just not substantial however stays enticing, whereas the dividend seems comparatively secure. The corporate has projected a 2025 payout ratio of ~48%, indicating a sustainable dividend. In consequence, we view Atmos Power as a blue-chip inventory.
Ultimate Ideas
Atmos Power inventory is enticing for traders searching for an above-average yield and common dividend progress. Due to this, it might probably serve a beneficial function in an revenue investor’s portfolio. The inventory affords a really safe and rising dividend revenue stream, and its dividend yield is effectively above the common dividend yield of the S&P 500 Index.
Word: Atmos Power additionally ranks effectively utilizing The Chowder Rule.
Atmos Power can be a Dividend Aristocrat and may elevate its dividend annually. With five-year anticipated returns of 11% per 12 months, ATO inventory is a purchase.
Moreover, the next Certain Dividend databases include essentially the most dependable dividend growers in our funding universe:
If you happen to’re searching for shares with distinctive dividend traits, take into account the next Certain Dividend databases:
The key home inventory market indices are one other strong useful resource for locating funding concepts. Certain Dividend compiles the next inventory market databases and updates them month-to-month:
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