July 19, 2025 a 07:31 am
ATO: Dividend Analysis - Atmos Energy Corporation
Atmos Energy Corporation showcases a commendable pattern of stable dividend payments over years. Despite the challenges in their free cash flow, the consistent growth in dividends suggests a commitment to maintaining shareholder value. With a reliable payout ratio and a robust dividend history, Atmos Energy stands as a reputable candidate for dividend-focused investors.
📊 Overview
Atmos Energy Corporation's financial metrics demonstrate a well-rounded approach to maintaining and enhancing shareholder value. Despite challenges in specific cash flow metrics, their strong dividend history underscores their commitment to reliable shareholder returns.
| Metric | Value |
|---|---|
| Sector | Energy |
| Dividend yield | 2.18 % |
| Current dividend per share | 3.23 USD |
| Dividend history | 41 years |
| Last cut or suspension | None |
🔍 Dividend History
The recorded 41-year history of dividend payments by Atmos Energy highlights its reliability in generating consistent returns for shareholders. A steady dividend payment stream is crucial for investors seeking stable income from their investment portfolios.
| Year | Dividend Per Share (USD) |
|---|---|
| 2025 | 1.74 |
| 2024 | 3.285 |
| 2023 | 3.025 |
| 2022 | 2.78 |
| 2021 | 2.555 |
📈 Dividend Growth
The moderate growth in dividends, averaged at 8.85% over the last five years, reflects the company’s ability to enhance shareholder value, while balancing reinvestment and financial health.
| 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
Maintaining a reasonable payout ratio is vital in ensuring financial flexibility for future growth and market downturn resilience.
| Key figure | Ratio |
|---|---|
| EPS-based | 45.25 % |
| Free cash flow-based | -39.32 % |
The EPS-based payout ratio of 45.25% is healthy, providing room for future investments or increased dividends. However, the negative FCF-based payout ratio indicates potential cash constraints.
💰 Cashflow & Capital Efficiency
Analyzing cash flow and its efficiency is essential in understanding a company's financial health, ensuring it generates enough cash to cover operations and dividends.
| 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 | 1.67 | 0.81 | 2.50 |
| Stock-based Compensation to Revenue | 0.257 % | 0.238 % | 0.256 % |
| Free Cash Flow / Operating Cash Flow Ratio | -0.69 | 0.189 | -1.50 |
The cash flow analysis reveals concerns about the Free Cash Flow Yield, which, if unresolved, might pressure dividend sustainability or future investment strategies.
📈 Balance Sheet & Leverage Analysis
Assessing the balance sheet and leverage helps evaluate Atmos Energy’s financial sustainability, particularly its capacity to service its debt.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 0.67 | 0.65 | 0.86 |
| Debt-to-Assets | 0.32 | 0.31 | 0.37 |
| Debt-to-Capital | 0.40 | 0.39 | 0.46 |
| Net Debt to EBITDA | 3.73 | 4.03 | 5.43 |
| Current Ratio | 1.33 | 0.65 | 0.85 |
| Quick Ratio | 0.78 | 0.45 | 0.75 |
| Financial Leverage | 2.07 | 2.07 | 2.36 |
Overall, Atmos Energy maintains solid financial leverage, but the higher debt levels constrained by recent profitability signify the need to manage leverage prudently.
📈 Fundamental Strength & Profitability
Fundamental performance, including efficiency metrics like ROE and margins, indicates Atmos Energy's ability to turn equity and sales into profit effectively.
| 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 to Revenue | 0 % | 0 % | 0 % |
The company exhibits consistent profitability through its stable ROE, alongside high margins, supporting its potential for sustained long-term growth.
🏦 Price Development
🎯 Dividend Scoring System
| Category | Score | Score Bar |
|---|---|---|
| Dividend yield | 3 | |
| Dividend Stability | 5 | |
| Dividend growth | 4 | |
| Payout ratio | 4 | |
| Financial stability | 4 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 2 | |
| Balance Sheet Quality | 4 |
Total Score: 31/40
✅ Rating
Atmos Energy Corporation is a solid choice for dividend-focused investors, given its robust dividend continuity and growth pattern. Despite some challenges in cash flow coverage, their prudent financial management and balance sheet quality support a positive outlook. Investors seeking stable and moderately growing dividend income may find Atmos Energy an appealing long-term holding.