Top 3 Dividend Stocks That Will Profit From Natural Gas Price Tear
These three high-dividend stocks can give investors some lucrative exposure to rising natural gas prices.
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Natural gas prices are on a tear — at $4.06, natural gas has more than doubled in the past year. Investors looking for long-term opportunities should take a closer look at dividend stocks that operate in the natural gas industry.
Companies that have durable competitive advantages in the area of natural gas production or distribution, can raise their dividends each year, even during periods of economic recessions.
This article will take a look at three stocks currently paying dividends that will benefit from rising natural gas prices.
1. National Fuel Gas (NFG)
National Fuel Gas Co. NFG is a diversified energy company that operates in five business segments: Exploration and Production, Pipeline and Storage, Gathering, Utility, and Energy Marketing. The largest segment of the company is Exploration and Production. Thanks to its vertically-integrated business model, it enjoys significant synergies.
In late January 2025, National Fuel Gas reported financial results for the first quarter of fiscal 2025. The company reduced its production by 3% over the prior year’s quarter due to depressed gas prices. Thanks to effective hedging, the average realized price of natural gas rose from $2.51 to $2.53.
Moreover, thanks to higher rates in Pipeline and Storage, earnings-per-share grew 14%, from $1.46 to $1.66, and exceeded the analysts’ consensus by $0.10. The company has beaten the analysts’ estimates in 19 of the last 23 quarters.
As the price of natural gas has increased lately amid cold weather and as National Fuel Gas expects to grow its production, it has raised its guidance for earnings-per-share in fiscal 2025 from $5.50 to $6.00, to $6.50 to $7.00.
National Fuel Gas pursues growth by growing its natural gas production and expanding its pipeline network. The company has grown its earnings-per-share at a 6.2% average annual rate over the last seven years. Moreover, the company grew its proved reserves 8% in 2022 and 9% in 2023. This certainly bodes well for future growth prospects.
National Fuel Gas has a healthy balance sheet while its interest coverage level stands at a strong 5.2. Moreover, its dividend payout ratio is sufficiently low to enable continued dividend growth even if earnings stall temporarily. Management has always targeted a dividend payout ratio around 50% in order to have a wide margin of safety against the wide fluctuations of the price of natural gas.
NFG has increased its dividend for 54 consecutive years. NFG shares currently yield 2.8%.
2. Northwest Natural Holding (NWN)
NW Natural NWN was founded in 1859 and has grown from a small utility to a large publicly-traded utility today. The utility’s mission is to deliver natural gas to its customers in the Pacific Northwest and it has done that well, affording it the ability to raise its dividend for 69 consecutive years.
On February 28, 2025, Northwest Natural Holding Company reported its financial results for the fourth quarter of 2024. The company achieved an adjusted net income of $90.6 million for the full year, or $2.33 per share, slightly down from $93.9 million, or $2.59 per share, in 2023. This decrease was primarily due to regulatory lag affecting the first 10 months of 2024 before new Oregon gas utility rates became effective on November 1.
The utility margin increased by $26.3 million, mainly due to these new rates, while gas utility operations and maintenance expenses decreased by $2.1 million, excluding regulatory disallowances, owing to lower contractor costs and bad debt expenses. However, utility depreciation and general taxes rose by $12.1 million due to additional capital investments.
Acquisitions are a major part of NWN’s future growth plans. In January 2025, NWN completed the acquisition of Sea Energy, a rapidly growing natural gas utility in Texas, marking a significant driver for long-term growth. Sea Energy has demonstrated strong customer growth of 22% from 2021 to 2024, compounded annually, and is expected to continue its double-digit growth trajectory.
Additionally, NWN's water and wastewater utilities experienced a robust growth rate of 4.6% in 2024, including both organic growth and acquisitions. The company also operationalized two renewable natural gas facilities.
NW Natural’s quality metrics have been very steady in the past decade. Seventy-six percent of its total assets are encumbered by debt, which is completely acceptable for a utility. Its interest coverage is fairly strong, so there are certainly no financing concerns moving forward. The payout ratio is around three-quarters of earnings, which is much improved from previous years.
NWN has increased its dividend for 50 consecutive years. NWN stock currently yields 4.7%.
3. UGI Corp. (UGI)
UGI Corporation UGI is a gas and electric utility that operates in Pennsylvania, in addition to a large energy distribution business that serves the entire U.S. and other parts of the world. It was founded in 1882 and has paid consecutive dividends since 1885. The company operates in four reporting segments: AmeriGas, UGI International, Midstream & Marketing, and UGI Utilities.
UGI Corporation reported strong first-quarter fiscal 2025 results, posting adjusted diluted earnings per share of $1.37, a 14% increase from the prior year. The performance was driven by strong demand in the natural gas segment, higher gas base rates at Mountaineer, and effective tax management.
The company deployed over $200 million in capital investments, primarily in its natural gas businesses, as part of its ongoing infrastructure modernization program, which supports system reliability, customer growth and safety enhancements. The utility segment also benefited from a colder-than-expected winter, leading to increased core market volumes.
The company also announced a gas base rate case filing in Pennsylvania, requesting a $110 million rate increase to support over $750 million in planned capital investments. AmeriGas continues its transformation with a newly-implemented localized pod structure, designed to improve customer experience, efficiency and accountability.
UGI reaffirmed its full-year adjusted EPS guidance range of $2.75 to $3.05, reflecting confidence in its diversified portfolio, disciplined capital allocation and continued operational improvements.
UGI’s main competitive advantage is in its highly-diversified business model. It has electric and gas utilities, propane distribution that covers a wide geographic area and diverse customer base, as well as a variety of other energy generation and distribution activities.
This allows it to not only weather downturns in any particular business, but provides several avenues for growth as well.
The dividend payout ratio is quite reasonable today. UGI expects a roughly 50% payout ratio for the foreseeable future, indicating excellent dividend safety. UGI has increased its dividend for 36 consecutive years. UGI stock currently yields 4.6%.
At the time of publication, Ciura had no positions in any securities mentioned.