Only 4 Days Left Before ONE Gas, Inc. (NYSE:OGS) Will Be Trading Ex-Dividend

Kevin Zeng

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Have you been keeping an eye on ONE Gas, Inc.’s (NYSE:OGS) upcoming dividend of US$0.50 per share payable on the 08 March 2019? Then you only have 4 days left before the stock starts trading ex-dividend on the 21 February 2019. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at ONE Gas’s most recent financial data to examine its dividend characteristics in more detail.

View our latest analysis for ONE Gas

5 checks you should use to assess a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

  • Is its annual yield among the top 25% of dividend-paying companies?

  • Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

  • Has dividend per share amount increased over the past?

  • Is is able to pay the current rate of dividends from its earnings?

  • Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

NYSE:OGS Historical Dividend Yield February 16th 19
NYSE:OGS Historical Dividend Yield February 16th 19

How well does ONE Gas fit our criteria?

The company currently pays out 54% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Going forward, analysts expect OGS’s payout to increase to 66% of its earnings. Assuming a constant share price, this equates to a dividend yield of 2.6%. Furthermore, EPS should increase to $3.4. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.

When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.

Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. The reality is that it is too early to consider ONE Gas as a dividend investment. It has only been consistently paying dividends for 5 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

In terms of its peers, ONE Gas generates a yield of 2.4%, which is on the low-side for Gas Utilities stocks.

Next Steps:

If ONE Gas is in your portfolio for cash-generating reasons, there may be better alternatives out there. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three pertinent factors you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for OGS’s future growth? Take a look at our free research report of analyst consensus for OGS’s outlook.

  2. Valuation: What is OGS worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether OGS is currently mispriced by the market.

  3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.