Three Energy Aristocrat Stocks For Investors To Consider

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The oil and energy sector, as well as the utilities sector, are both home to a surplus of high-yielding dividend stocks. As business boomed over the last year with higher prices of energy commodities, many of these companies were able to raise their dividend.

Here is a look at three energy Aristocrats that have consecutively raised their dividend for the last 25 years.


Atmos Energy (ATO - Free Report)

Atmos energy engages in regulated natural gas distribution and storage. The company was founded in 1906, and has an excess of three million natural gas distribution customers in more than 1,400 communities across eight states.

ATO has a 2.31% annual dividend yield at $2.72 a share. The annualized dividend growth over the last five years is 8.87%. ATO currently has a 49% payout ratio and has raised its dividend for 38 consecutive years.

ATO currently sports a Zacks Rank #2 (Buy) with EPS estimates on the rise. Atmos Energy’s earnings are expected to climb 8% to $5.57 a share in 2022, based on Zacks estimates. Fiscal 2023 calls for another 7% earnings growth. Top line growth is expected as well, with sales set to jump 22% this year and another 14% in FY23 to $4.77 billion.

Year-to-date, ATO is up +15% to outperform the S&P 500, which is down -16%. ATO has also outperformed its peer group, which is down 9% year-to-date. ATO is also up 51% over the last five years, underperforming the benchmark at 81%. However, ATO has drastically outperformed its peer group in this time span.

Zacks Investment Research

Image Source: Zacks Investment Research

ATO is certainly a leader in the Utility-Gas Distribution Industry. ATO has recently been trading around $118 a share. Trading near its 52-week highs, the average Zacks price target of $126.57 still offers upside of 6%. This on top of its steady dividend may be reason for investors to consider the stock.

ATO has a forward P/E of 21.1X, slightly above the industry average of 19.2X. This is below its five year high of 26.4X and right at its median of 21.4X. It is also important to note that ATO’s Utility- Gas Distribution Industry is currently in the top 22% of over 250 Zacks Industries.


Exxon Mobil (XOM - Free Report)

Oil conglomerate Exxon Mobil is well known for its dividend, and has the highest yield on the list. Exxon Mobil is a premier integrated energy company with three main segments: Upstream (oil & gas exploration and production), Downstream (refining), and Chemical (manufacturing & marketing petrochemicals).

XOM has a 3.74% annualized dividend yield at $3.52 a share. Exxon Mobil’s annualized dividend growth over the last five years is 2.80% with a payout ratio of 36%. Exxon Mobile has raised its dividend for 39 consecutive years.

Exxon Mobil’s year-to-date performance has been considerably better than its Oil-Gas-Integrated-International Peers. XOM is up +60% year-to-date vs. its peer group’s -11% drop.

Zacks Investment Research

Image Source: Zacks Investment Research

 XOM is roughly 10% off its 52-week highs, recently trading at around $95 a share. XOM has a forward P/E of 7.4X. This is above its industry average of 4.2X, but below the S&P 500 at 18X.

Better still, XOM has been trading at a discount to its five-year median of 16.7X and well off its highs of 382.1X. Even with the already stellar performance year-to-date, XOM currently has an overall “A” VGM style score. The average Zacks Price target of $99.77 suggests upside of 5% from current levels.

According to Zacks estimates, XOM earnings are expected to jump +140% to $12.39 a share in 2022. Fiscal 2023 earnings are expected to be down -18%, but estimate revisions are turning positive again. Exxon Mobil’s sales are expected to be up +53% this year, but slightly down -4% in FY23 to $421.39 billion.

With the huge increase in top and bottom line growth for the current year, XOM currently lands a Zacks Rank #2 (Buy). Exxon Mobil’s Oil and Gas -Integrated- International Industry is also in top 16% of over 250 Zack Industries.


NextEra Energy (NEE - Free Report)

Another dividend aristocrat for investors to consider among energy stocks is NextEra Energy. NextEra is a public utility holding company engaged in the generation, transmission, distribution, and sale of electric energy.

NEE has a 1.88% annualized divided yield at $1.70 a share. The annualized dividend growth over the last five years is +11.86% with a payout ratio of 63%. NEE has raised its dividend for 28 consecutive years.

NextEra's stock is down roughly -3.7% in 2022, but rising estimates along with its reliable dividend make the stock worth a look. NEE has a forward P/E of 31.2X, which is higher than the industry average of 19.8X. At current levels, NEE’s forward P/E is below its five-year high of 36.8X and not too far from the median of 27X during this time span.

We can also see from the chart below that NEE has largely outperformed its peers over the last five years. NEE is up an impressive +167% vs. its peer group. This also outpaced the S&P 500 benchmark, which is up +81% in the last five years.

Zacks Investment Research

Image Source: Zacks Investment Research

Recently trading at around $90 a share, NEE is not to far off its 52-week highs. NextEra could see higher highs as fiscal 2022 earnings are expected to climb 13% to $2.89 a share. Fiscal 2023 earnings are expected to climb another 8%. Top line growth is expected as well, with sales expected to be up 18% in 2022 and another 31% in FY23 to $26.47 billion.

NEE has also beat earnings expectations for 10 consecutive quarters, dating back to April of 2020. NextEra’s Utility-Electric Power Industry is in the top 27% of over 250 Zacks Industries. NEE is expected to have 9% EPS growth over the next five years, which may catch the attention of longer-term investors.


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