July 04, 2025 a 03:31 pm
📊 ATO: Dividend Analysis - Atmos Energy Corporation
Atmos Energy Corporation, with over four decades of continuous dividends, continues to solidify its foothold in the utility sector. Despite economic uncertainties, its consistent dividend history and moderate growth levels position it favorably for long-term investors. Key financial metrics indicate stability, backed by sound capital management and strategic growth initiatives. However, prudent analysis of recent performance metrics reveals areas needing attention to sustain its growth trajectory.
🗣️ Overview
Atmos Energy operates in the Utilities sector, offering a mix of stable returns with growth potential. The company's dividend yield currently stands at 2.18%, supported by a dividend per share of USD 3.23. With a 41-year history of dividend payments, Atmos Energy demonstrates resilient payout practices, having never experienced a cut or suspension.
| Key Metric | Details |
|---|---|
| Sector | Utilities |
| Dividend Yield | 2.18% |
| Current Dividend Per Share | 3.23 USD |
| Dividend History | 41 years |
| Last Cut/Suspension | None |
📈 Dividend History
Atmos Energy's dividend history spanning 41 years illustrates its commitment to investor returns and financial resilience. Consistent growth in dividend payments underlines the company's robust cash flow management, an attractive trait for income-centered investors.
| Year | Dividend Per Share |
|---|---|
| 2025 | 1.74 |
| 2024 | 3.285 |
| 2023 | 3.025 |
| 2022 | 2.78 |
| 2021 | 2.555 |
📉 Dividend Growth
The dividend growth rates over recent years show steady progress, indicating a sustainable approach toward enhancing shareholder value. Over the past three and five years, dividends have grown at rates of approximately 8.74% and 8.84%, respectively.
| Time | Growth |
|---|---|
| 3 years | 8.74% |
| 5 years | 8.84% |
The average dividend growth is 8.84% over 5 years. This shows moderate but steady dividend growth.
✅ Payout Ratio
Payout ratios are an essential indicator of dividend sustainability and potential for future increases. The company's EPS-based payout ratio stands at 45.25%, while the FCF-based payout ratio is in the negative due to certain capital expenditures.
| Type | Ratio |
|---|---|
| EPS-based | 45.25% |
| Free Cash Flow-based | -39.32% |
With an EPS payout ratio of 45.25%, Atmos Energy maintains a conservative position, ensuring dividend security. The negative FCF ratio, reflective of strategic reinvestment, should be monitored to ensure liquidity sustains dividend promises.
📊 Cashflow & Capital Efficiency
Analyzing cash flow and capital efficiency offers insights into a company's operational effectiveness and reinvestment strategies. Atmos Energy's metrics suggest active capital allocation, aligning with its growth objectives.
| Year | 2022 | 2023 | 2024 |
|---|---|---|---|
| Free Cash Flow Yield | -10.45% | 4.25% | -5.69% |
| Earnings Yield | 5.52% | 5.76% | 4.93% |
| CAPEX to Operating Cash Flow | 250% OCF | 81% OCF | 169% OCF |
| Stock-based Compensation to Revenue | 0.26% | 0.24% | 0.26% |
| Free Cash Flow / Operating Cash Flow Ratio | -150% | 18.90% | -69.40% |
Despite negative free cash flow yields at times, the strategic capital expenditure focuses on long-term growth. The earnings yield provides a positive outlook; however, enhanced operating cash flow management is imperative for future financial agility.
⚠️ Balance Sheet & Leverage Analysis
A solid balance sheet with prudent leverage is crucial for sustaining operations and navigating economic fluctuations. Atmos Energy's financial ratios reflect its commitment to maintaining a balanced debt profile.
| Year | 2022 | 2023 | 2024 |
|---|---|---|---|
| Debt-to-Equity | 86.49% | 64.75% | 66.86% |
| Debt-to-Assets | 36.71% | 31.26% | 32.27% |
| Debt-to-Capital | 46.38% | 39.30% | 40.07% |
| Net Debt to EBITDA | 5.43 | 4.02 | 3.73 |
| Current Ratio | 84.60% | 65.49% | 93.90% |
| Quick Ratio | 74.66% | 44.78% | 78.44% |
| Financial Leverage | 2.36 | 2.07 | 2.07 |
A steady reduction in leverage and robust coverage ratios reinforce financial strength. While debt management reflects steady progress, vigilance is necessary to navigate rising interest rate environments effectively.
📊 Fundamental Strength & Profitability
Evaluating profitability and fundamental strength offers insights into a company's operational and strategic efficacy. Atmos Energy demonstrates strong foundational principles and financial resilience.
| Year | 2022 | 2023 | 2024 |
|---|---|---|---|
| Return on Equity | 8.22% | 8.14% | 8.58% |
| Return on Assets | 3.49% | 3.93% | 4.14% |
| Margins: Net | 18.43% | 20.71% | 25.04% |
| Margins: EBIT | 22.65% | 26.59% | 34.25% |
| Margins: EBITDA | 35.47% | 40.79% | 50.33% |
| Margins: Gross | 59.95% | 48.14% | 57.92% |
| R&D to Revenue | 0% | 0% | 0% |
The solid return on equity and improving profitability margins highlight operational efficacy. Despite high capital expenditure, returns indicate an adept management team steering value creation for stakeholders.
📈 Price Development
💡 Dividend Scoring System
A comprehensive scoring system evaluates Atmos Energy’s dividend fit in various categories, with scores assigned from 1 to 5, summing up to a total out of 40.
| Category | Score | Visualization |
|---|---|---|
| Dividend Yield | 4 | |
| Dividend Stability | 5 | |
| Dividend Growth | 4 | |
| Payout Ratio | 3 | |
| Financial Stability | 4 | |
| Dividend Continuity | 5 | |
| Cashflow Coverage | 3 | |
| Balance Sheet Quality | 4 |
Total Score: 32/40
🔍 Rating
Atmos Energy Corporation presents a robust dividend portfolio underpinned by consistent payouts and moderate growth. The steadiness in dividend history and leverage management reinforces an attractive proposition for growth-oriented as well as income-focused investors. While certain metrics indicate potential areas for improvement, the overall outlook remains positive. Investors should maintain a watchful eye on cash flow and leverage matrices to sustain this momentum.