A Great Balance Of Dividend Yield And Growth From The Garden State
When people think of New Jersey, they usually think of oil refineries, traffic, or The Sopranos TV show.
However, most people don’t realize New Jersey is the Garden State.
I was born and raised in New Jersey, and there are thousands of acres of beautiful farms, forests, and other green spaces.
(It’s a pet peeve of mine when people trash my home state!)
But enough about New Jersey… I want to talk about New Jersey Resources Corporation (ticker: NJR).
New Jersey Resources is a utility serving over 500,000 customers in the central part of the state.
It’s primarily a natural gas utility, but New Jersey Resources also owns and operates solar farms for electricity generation.
Despite its smaller size, its growth has been very stable.
Over the past decade, New Jersey Resources grew its earnings by an average of 5% each year.
A 5% growth rate doesn’t seem like much, but utility companies are known for their stability and rarely achieve high growth rates.
Another area showing growth is the dividend.
New Jersey Resources has grown its dividend for 31 consecutive years.
The utility company has also made dividend payments every quarter since 1952!
And over the past 20 years, the utility has averaged over 7% growth in its dividend each year.
Its next dividend increase is just around the corner.
New Jersey Resources is raising its quarterly dividend to $0.50, which is 5.2% higher than its last payment.
But you need to act quickly.
You need to own shares in New Jersey Resources by Wednesday (September 23) to get the higher dividend.
The higher dividend also pushes the yield up to 3.8%, which is its highest point since last February.
Other utility stocks have higher dividend yields, but very few grow their dividends faster than inflation.
The combined yield and dividend growth give New Jersey Resources an excellent balance for those who need immediate income but are also worried about their dividend checks losing value over time.
And I don’t see New Jersey Resources pausing its dividend growth anytime soon.
Its dividend payout ratio sits at around 50%, which is right in line with its peers.
Plus, the utility is incredibly profitable.
New Jersey Resources’ profit margin of 16.5% is double the utility industry average and is currently near an all-time high for the company.
We’re also getting the company at a good stock price.
New Jersey Resources’ price-to-earnings (P/E) ratio is 14.6x, which is slightly below the industry average.
So, you can get a good dividend yield in a stable industry, with some great dividend growth, and at a good price.
New Jersey Resources checks a lot of boxes for dividend investors, so consider the stock if you’re looking for a nice utility to add to your portfolio.
What other dividend stocks are you looking at right now?
Michael Jennings
Dividend Stocks Research
Category: Dividend Stocks To Buy?, Dividend Yield
