National Fuel Gas: From Dividend King to Growth Champion in the Energy Shift

The Setup:
National Fuel Gas (NFG) has long been a stalwart in the dividend world, earning its “Dividend King” status with 54 straight years of payout increases. But here's the twist: this 200-year-old company isn't just about dividends anymore. Under the radar, NFG is morphing into a growth powerhouse—thanks to a resilient business model, an undervalued stock, and tailwinds from the energy transition. Let's dive in.

Why NFG's Dividend Strength Isn't the Whole Story

First, let's tip our hat to the dividend. NFG's 54-year streak is no small feat, especially in an era of rising rates and economic uncertainty. The stock currently yields 2.5%, and the payout is backed by a “Very Safe” sustainability score, according to analysts. But here's the kicker: NFG isn't resting on its laurels.

Take the Q2 2025 earnings report: Net income soared 32% year-over-year to $2.37 per share, driven by record natural gas production (105.5 Bcf) and rate settlements in key markets like New York and Pennsylvania. The company's diversified operations—upstream exploration, midstream pipelines, and regulated utilities—are all firing on all cylinders.

The Growth Catalysts: Undervalued Stock, Regulatory Tailwinds, and the Energy Shift

1. Undervalued Stock:
   At recent prices (~$68), NFG trades at just 9.5x forward earnings, a discount to its historical average and peers like Dominion Energy (D) or NextEra (NEE). With 2025 earnings guidance raised to $6.75–$7.05 per share, this looks like a buy the dip opportunity.

2. Regulatory Boosts:
   Rate settlements are fueling growth. In New York, the 2024 agreement provided its first base rate hike since 2017, while Pennsylvania's gas cost management reforms are reducing utility liabilities. These moves ensure steady cash flow for decades.

3. Natural Gas's Golden Era:
   Natural gas is the bridge fuel to renewables, and NFG's upstream business is positioned to profit from rising demand. With 2.5 Tcfe of proved reserves and a focus on low-cost production, NFG is insulated from price volatility. Meanwhile, its midstream assets—like the Empire Pipeline—benefit from FERC-approved rate hikes.

The Payout Ratio: A Speed Bump, Not a Roadblock

Critics will point to the 470% payout ratio (based on earnings) as a red flag. But here's the counter: NFG's cash flow is stronger than its net income suggests. The company's free cash flow (FCF) grew 5% year-over-year in Q2, and management has prioritized capital discipline—reducing debt while funding dividends and growth projects.

Plus, the dividend is only one piece of the puzzle. NFG's stock has already risen 36% since late 2024, and with its revised 2025 earnings guidance, there's room for multiple expansion.

Investment Thesis: Buy for Growth, Hold for Dividends

This isn't your grandfather's utility stock. NFG is a total return machine, blending dividend stability with growth in a sector that's undervalued. Here's why to act now:
- Low valuation leaves upside for earnings beats.
- Rate settlements provide a cash flow moat.
- Natural gas demand is a long-term tailwind.

Action Item:
Buy NFG at $68, aiming for $85–$90 by end-2025. Set a stop at $60. If you're in for the long haul? This could be a decade-long winner, leveraging both energy trends and its dividend royalty status.

Final Cramer-Style Takeaway:
National Fuel Gas isn't just a Dividend King—it's a growth rebel hiding in plain sight. With its three-pronged business, regulatory tailwinds, and undervalued stock, NFG is primed to outperform. Don't let the dividend distract you—this is a buy for growth investors.

Remember: In investing, as in life, sometimes the best opportunities are the ones that evolve. NFG is evolving—fast.