On June 20, Zacks Investment Research upgraded Atlanta,
Georgia-based energy services holding company
AGL Resources Inc.
) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
AGL Resources is a premier gas distribution utility with relatively
low risk earnings growth and an expanding dividend that yields a
Positioned in a niche industry with high barriers to entry, this
energy services holding company enjoys near-monopoly status in its
area of operation. On top of this, the utility's best-in-class cost
control and recession-proof business model presents a unique
opportunity to own a safe stock. Sporting a low beta - translating
into less volatility - and a reasonable valuation, we see AGL
Resources as an attractive investment in the energy infrastructure
The 2011 acquisition of Nicor Inc. has significantly expanded AGL
Resources' scope, scale and geographic reach. The merged entity is
the biggest gas-only distributor in the nation with a large
customer base (about 4.5 million) and an enviable supply position
that includes access to eight interstate pipeline connections and
significant underground storage assets.
The impending sale of AGL Resources' Tropical Shipping business
will not only allow the company to concentrate on its core
regulated natural gas assets but also reduce the unpredictability
surrounding its future cash flows.
Finally, AGL Resources - one of the major distributors of natural
gas in the nation along with the likes of
Atmos Energy Corp.
) - pays an annual dividend of $1.96 per share, yielding an
attractive 3.6%. The utility increased its dividend payout by 4.3%
in February 2014, marking the 9th consecutive year of dividend
increases. AGL Resources has a long and consistent dividend paying
record. The company has paid dividends in each of the last 266
quarters for more than 60 years. As such, we believe AGL Resources'
dividend to be safe and reliable.
Other Stocks to Consider
Apart from AGL Resources, investors interested in the same sector
may consider stocks like
National Fuel Gas Co.
New Jersey Resources Corp.
). Both these stocks carry a Zacks Rank #1 (Strong Buy).
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AGL RESOURCES (GAS): Free Stock Analysis Report
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NJ RESOURCES (NJR): Free Stock Analysis Report
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