The dividend aristocrats may represent different industries, but one thing unites them all: their business has been operating steadily for a long time, with little or no change in market conditions. MDU Resources has been paying dividends for 82 years, and for the last 30 of them, management has found opportunities to increase the amount of payments.
About 65% of the company's revenue in 2020 came from construction services, and 35% - from energy supplies (electricity and natural gas). Despite the challenges associated with the pandemic, revenue and profit increased by 3.7% and 16% YoY, respectively. This is the highest performance since 2007, when the financial report reflected large one-time receipts from the sale of the division.
MDU Resources generates huge amounts of operating cash flow: $768 million in 2020, while only $166 million was spent on dividends. This feature will make it possible to implement plans for a capital investment of $826 million in 2021. Over the past 5 years, the amount of dividends has increased by an average of 2.6% per year. However, according to management forecasts, by the end of this year, EPS is able to increase by 5%, which means that there is a potential for a more significant increase.
At the moment, the P/E ratio is 15.8 x, which is significantly lower than the average value for the last 10 years – 19.5 x. Given the changing mood in the stock market, MDU Resources shares can be a good addition to the investment portfolio.