WGL Holdings Offers Four Decades of Annual Dividend Hikes (WGL)

WGL Holdings (NYSE:WGL) has been paying dividends for the past 165 years and has hiked its annual dividend distribution for the last 40 consecutive years.

In addition to the long record of rising dividends, the company currently pays a 2.4% yield that is slightly above the financial sector’s average yield. Over the past year, the company provided a double-digit-percentage share price growth to complement its rising dividend income.

The company will pay its next dividend on February 1, 2018, to all its shareholders of record before the next ex-dividend date, which is set for January 9, 2018.

WGL Holdings Inc.  (NYSE:WGL)

Founded in 1848 and based in Washington, District of Columbia, WGL Holdings, Inc., operates through four business segments to sell and deliver natural gas and electricity, as well as provide other energy-related products and services. The company’s Regulated Utility segment delivers natural gas to retail customers and owns interests in underground natural gas storage facilities, including pipeline delivery facilities located in and around Hampshire County, West Virginia. Additionally, the Retail Energy-Marketing segment sells natural gas and electricity directly to residential, commercial and industrial customers. The Commercial Energy Systems segment provides clean and energy efficient solutions, including commercial solar, energy efficiency and combined heat and power projects to government and commercial clients. Lastly, the Midstream Energy Services segment acquires, manages and optimizes natural gas storage and transportation assets.

The current quarterly dividend payout of $0.51 is 4.6% above the $0.4875 quarterly distribution from the same period the previous year. At the current share price, the dividend yields 2.4% and converts to a $2.04 annualized  payout. That current yield of 2.4% is 1.4% higher than the average dividend yield of all the companies in the financial sector.

The annual dividend payout has been rising uninterrupted for the past four decades. Just over the past two decades, the annual dividend amount rose more than 70% as the result of a 2.7% average growth rate per year. The average growth rate accelerated recently and averages 5% over the past five years.

Currently, WGL Holdings has a 54% dividend payout ratio, which is a good indication that the company should be able to continue raising its distribution amount at 4% to 5% per year, at least in the short term. Based on company’s recent history, the next dividend hike should be announced in late February 2017, with an April ex-dividend date. A boost of $0.02 to $0.03 in the next quarter would raise the dividend distribution to between $0.53 and $0.54 per quarter for the remaining periods in 2018.

Over the past few years, the company’s share price provided significant contribution to the shareholders total return. The share price fell 2.9% from $76.40 on December 28, 2016, to its 52-week low of $74.19 on January 9, 2017. After bottoming out at the beginning of January, the share price jumped 12% over the following 30 days. After that quick spike, the share price settled into a slightly slower growth trend and reached its new 52-week high of $85.97 on October 27, 2017.

After the late October peak, the share price dipped 2.1% by November 22, 2017, but quickly recovered and continued to trade near the 52-week high throughout December 2017. The share price closed on December 27, 2017, at $85.64, which was 12.1% higher than it was one year prior on December 28, 2017, 15.4% above the January 2017 52-week low and 112% higher than it was five years earlier.

The high asset appreciation over the past few years combined with the steadily rising dividend to reward the company’s investors with double-digit-percentage total returns. The combined dividend and share price growth total return over the current one-year period was 13.2%. Over the past three years, the company rewarded its shareholders with a 68% total return and a 144% total return over the past five years.

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