UGI: A Dividend Stock to Consider Despite Recent Underperformance

The past three years have not been profitable for UGI (NYSE:UGI) investors, with the stock price fluctuating and failing to deliver consistent returns. However, there are several reasons why UGI remains an attractive investment option, particularly for income-oriented investors.

UGI Corporation, a regulated utility and energy distribution company, has a strong track record of dividend payments and growth. The company has paid dividends for 140 consecutive years and has increased its dividend for 37 consecutive years. This consistency and longevity are rare among dividend-paying stocks and indicate a strong commitment to returning value to shareholders.

One of the key reasons to consider UGI as a dividend stock is its high dividend yield. As of December 23, 2024, UGI offers a quarterly dividend of $0.375 per share, with a dividend yield of 5.44%. This high yield is attractive to income-oriented investors, as it provides a significant return relative to the stock price.

UGI's dividend growth rate has been consistent over the past decade, with a 10-year CAGR of 6%. While the dividend growth rate has fluctuated over the years, the company has maintained a steady increase in dividends, indicating a strong financial position and commitment to shareholders.

UGI's payout ratio is 120%, which is higher than the industry average of around 60%. However, this high payout ratio is not a concern for UGI, as the company has consistently generated strong free cash flow, which has allowed it to maintain its dividend payments and even increase them over time.

UGI's dividend policy is attractive to investors for several reasons. First, the company's long history of dividend payments and increases provides a sense of stability and reliability. Second, the high dividend yield makes UGI an attractive option for income-oriented investors. Finally, the company's consistent dividend growth indicates that it is committed to returning value to shareholders and has the financial strength to do so.

In comparison to its peers in the utilities sector, UGI's dividend policy is more attractive. While many utilities companies offer dividends, few have the same track record of consistent dividend increases and high yields as UGI. Additionally, UGI's dividend growth rate is higher than the industry average, indicating that the company is more focused on returning value to shareholders than its peers.

In conclusion, UGI's dividend policy is attractive to investors due to its long history of dividend payments and increases, high dividend yield, and consistent dividend growth. Compared to its peers in the utilities sector, UGI's dividend policy is more attractive, indicating that the company is committed to returning value to shareholders and has the financial strength to do so. Despite recent underperformance, UGI remains an attractive investment option for income-oriented investors.