Piedmont Natural Gas is a energy services company that distributes natural gas to 1,016,000 residential, commercial and industrial customers in portions of North Carolina, South Carolina and Tennessee.
PNY enjoys a simple business model within a stable market. I have been looking to increase my utility allocation, but have been uncomfortable with the underlying financials. At 3 Stars PNY is, by far, the highest ranked utility that I follow. At 52%, its debt to total capital is slightly above the 45% I prefer, but is not out of line with other utilities. Its free cash flow payout of 34% is well below the 60% maximum I look for and its 4 years if negative free cash flow in the last 10 years compares favorable with other utilities. Although the stocks dividend yield at 4.27% is lower than several others, its dividend growth rate of 3.74% is much higher. Overall, PNY is worthy of additional consideration when it is trading below my buy price of $26.17 and as my allocation allows.
Source: Dividends Value
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