April 23, 2025 a 03:31 pm
ATO: Dividend Analysis - Atmos Energy Corporation
Atmos Energy Corporation exhibits a consistent dividend history, making it a credible choice for dividend-seeking investors. With a 41-year track record of uninterrupted dividend distribution, it demonstrates both resilience and shareholder commitment. But watch for potential headwinds in negative free cash flow and high capital expenditures, which could affect future payouts.
📊 Overview
Delving into Atmos Energy Corporation’s dividend yield and financial health, we note a stable yield substantiated by a long history of consistent payouts. However, it's vital to monitor payout ratios as well as capital efficiency metrics.
| Metric | Value |
|---|---|
| Sector | Utilities |
| Dividend yield | 2.23 % |
| Current dividend per share | 3.23 USD |
| Dividend history | 41 years |
| Last cut or suspension | None |
🗣️ Dividend History
The company’s strong payout track record reflects reliability, attracting long-term income investors. Assessing historical dividend growth can help predict future trends.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 0.87 |
| 2024 | 3.285 |
| 2023 | 3.025 |
| 2022 | 2.78 |
| 2021 | 2.555 |
📈 Dividend Growth
Growth in dividends, though moderate, is consistent, suggesting stable future income. Monitoring these metrics offers insight into the company's ability to enhance shareholder value over time.
| Time | Growth |
|---|---|
| 3 years | 8.74 % |
| 5 years | 8.85 % |
The average dividend growth is 8.85 % over 5 years. This shows moderate but steady dividend growth.
⚠️ Payout Ratio
Payout ratios are essential indicators of dividend sustainability. While the EPS-based payout ratio appears healthy, a deeper exploration into free cash flow reveals challenges.
| Key Figure | Ratio |
|---|---|
| EPS-based | 46.63% |
| Free cash flow-based | -39.83% |
The EPS payout ratio of 46.63% suggests a safe dividend, but with negative free cash flow coverage, financial flexibility might be restricted, affecting long-term stability.
📊 Cashflow & Capital Efficiency
Understanding cash flow dynamics and capital allocation is crucial for sustaining dividends and growth. A shortfall in free cash flow poses risk while an examination of capital expenditure priorities is warranted.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | -5.69% | 4.25% | -10.45% |
| Earnings Yield | 4.93% | 5.76% | 5.52% |
| CAPEX to Operating Cash Flow | 1.69 | 0.81 | 2.50 |
| Stock-based Compensation to Revenue | 0% | 0% | 0% |
| Free Cash Flow / Operating Cash Flow Ratio | -69.41% | 18.90% | -150.05% |
| Return on Invested Capital | 4.76% | 4.41% | 3.98% |
Despite positive earnings yields, the negative free cash flow and high CAPEX signal potential cash constraints, impacting capital efficiency and limiting shareholder returns.
📈 Balance Sheet & Leverage Analysis
Debt management and leverage ratios are vital for assessing the company’s ability to meet its obligations and finance future growth without diluting shareholder returns.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 66.86% | 64.75% | 86.50% |
| Debt-to-Assets | 32.27% | 31.26% | 36.71% |
| Debt-to-Capital | 40.07% | 39.30% | 46.38% |
| Net Debt to EBITDA | 3.73 | 4.03 | 5.43 |
| Current Ratio | 1.56 | 0.65 | 0.85 |
| Quick Ratio | 0.78 | 0.45 | 0.75 |
| Financial Leverage | 2.07 | 2.07 | 2.36 |
The company maintains substantial leverage, which could limit its ability to increase dividends without impacting its financial base. Progressively managing debt is crucial to future financial health.
📉 Fundamental Strength & Profitability
Focusing on profitability and return measures highlights the company's efficiency in converting revenue into profit and its overall financial health.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 8.58% | 8.14% | 8.22% |
| Return on Assets | 4.14% | 3.93% | 3.49% |
| Net Margin | 25.04% | 20.71% | 18.43% |
| EBIT Margin | 34.25% | 26.59% | 22.65% |
| EBITDA Margin | 50.33% | 40.79% | 35.47% |
| Gross Margin | 57.92% | 48.14% | 59.95% |
| Research & Development / Revenue | 0% | 0% | 0% |
Despite an impressive Return on Equity, stagnant Research & Development expenditures might impede innovation and long-term growth prospects.
Price Development
✅ Dividend Scoring System
| Criteria | Score | |
|---|---|---|
| Dividend yield | 3 | |
| Dividend Stability | 4 | |
| Dividend growth | 4 | |
| Payout ratio | 2 | |
| Financial stability | 3 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 1 | |
| Balance Sheet Quality | 2 |
Total Score: 24/40
🗣️ Rating
Atmos Energy Corporation shows a commendable history of dividend stability and growth, offering potential for reliable returns to investors. However, caution is advised due to negative cash flow indicators that could affect future payouts. Monitoring their financial health, including leverage and capital efficiency, is critical. A HOLD recommendation is advised until cash flow metrics show consistent improvement.