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 the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
ONE Gas (OGS) is headquartered in Tulsa, and is in the Utilities sector. The stock has seen a price change of 1.18% since the start of the year. The natural gas distribution is currently shelling out a dividend of $0.68 per share, with a dividend yield of 3.48%. This compares to the Utility - Gas Distribution industry's yield of 3.17% and the S&P 500's yield of 1.42%.
Looking at dividend growth, the company's current annualized dividend of $2.72 is up 1.5% from last year. Over the last 5 years, ONE Gas has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.53%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. ONE Gas's current payout ratio is 56%, meaning it paid out 56% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for OGS for this fiscal year. The Zacks Consensus Estimate for 2026 is $4.91 per share, representing a year-over-year earnings growth rate of 9.60%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers its 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, OGS is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of #3 (Hold).
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ONE Gas, Inc. (OGS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).