All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

National Fuel Gas in Focus

Headquartered in Williamsville, National Fuel Gas (NFG) is an Oils-Energy stock that has seen a price change of 19.78% so far this year. The energy company is paying out a dividend of $0.51 per share at the moment, with a dividend yield of 2.83% compared to the Oil and Gas - Integrated - United States industry's yield of 2.29% and the S&P 500's yield of 1.56%.

Looking at dividend growth, the company's current annualized dividend of $2.06 is up 2% from last year. National Fuel Gas has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 3.72%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. National Fuel Gas's current payout ratio is 40%. This means it paid out 40% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for NFG for this fiscal year. The Zacks Consensus Estimate for 2025 is $6.64 per share, with earnings expected to increase 32.53% from the year ago period.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout.

For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, NFG presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).

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National Fuel Gas Company (NFG) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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