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In this article, we discuss 10 best natural gas dividend stocks to buy. If you want to see more stocks in this selection, check out 5 Best Natural Gas Dividend Stocks To Buy.
As per the The Business Research Company, the natural gas market size is expected to increase from $0.84 trillion in 2021 to $0.94 trillion in 2022 at a compound annual growth rate (CAGR) of 12%. The global natural gas market is forecasted to grow to $1.23 trillion in 2026 at a compound annual growth rate of 6.9%.
On October 27, The US Energy Information Administration announced a largely bullish 52 Bcf increase to natural gas inventories during the last week, driven by high winter heating demand across the Central and Eastern US tightening the local supply and demand equilibrium. However, this was lower than the consensus expectation for a 65 Bcf addition to gas inventories by S&P Global.
A new global gas world order is underway, as the 50-year gas trade between Europe and Russia unravels in the wake of the Russian war on Ukraine. Suppliers are rearranging their trade patterns, and producers are looking into new prospects and opportunities for creating alternative supply sources. This gives way to multiple players entering the market or expanding their share as end-markets move away from Russian gas. Some of the best natural gas stocks to invest in, which also pay generous dividends, include Exxon Mobil Corporation (NYSE:XOM), Halliburton Company (NYSE:HAL), and Chesapeake Energy Corporation (NASDAQ:CHK).
Our Methodology
We chose the following natural gas dividend stocks based on positive analyst coverage, strong business fundamentals, and resilient dividend profiles. The dividend yields as of October 28 have been mentioned. We have assessed the hedge fund sentiment from Insider Monkey’s database of 895 elite hedge funds tracked as of the end of the second quarter of 2022.
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Best Natural Gas Dividend Stocks To Buy
10. Equinor ASA (NYSE:EQNR)
Number of Hedge Fund Holders: 9
Dividend Yield as of October 28: 3.56%
Equinor ASA (NYSE:EQNR) was incorporated in 1972 and is headquartered in Stavanger, Norway. The company engages in the exploration, production, and transportation of petroleum and petroleum-derived products. Equinor ASA (NYSE:EQNR) also transports, processes, markets, and trades in oil and gas commodities, such as crude and condensate products, gas liquids, natural gas, and liquefied natural gas.
On October 28, Equinor ASA (NYSE:EQNR) declared a quarterly dividend of $0.20 per share, in line with previous. The dividend is payable on January 25, 2023, to shareholders of record on January 10. Additionally, the board also declared an extraordinary cash dividend of $0.70. Equinor ASA (NYSE:EQNR)’s dividend yield on October 28 came in at 3.56%, making it one of the best dividend stocks to invest in.
SEB Equities analyst Anders Rosenlund upgraded Equinor ASA (NYSE:EQNR) to Buy from Hold with a NOK 450 price target on September 7.
According to Insider Monkey’s second quarter database, 9 hedge funds were bullish on Equinor ASA (NYSE:EQNR), compared to 16 funds in the prior quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the biggest position holder in the company, with 10.25 million shares worth $356.45 million.
In addition to Exxon Mobil Corporation (NYSE:XOM), Halliburton Company (NYSE:HAL), and Chesapeake Energy Corporation (NASDAQ:CHK), Equinor ASA (NYSE:EQNR) is one of the best dividend stocks to invest in.
Here is what Massif Capital has to say about Equinor ASA (NYSE:EQNR) in its Q2 2021 investor letter:
“We currently have two oil-related positions in our portfolio and believe the oil opportunity set is ripe. As one might expect, both positions, (including Equinor: EQNR) performed well during the second quarter, given the steady march higher that oil has made in recent months. We maintain a positive outlook for both companies, although, importantly, our posture is not predicated on an expectation for continued oil price appreciation. This is not because of our inability to imagine scenarios where that does occur, but more out of an abundance of caution for what is a highly volatile commodity that at current price levels should be more than sufficient to generate ample free cash flow for any investable oil firm.
In the future, we expect both firms in the portfolio to generate significant free cash flow and expect EQNR to reinvest that free cash flow into a combination of offshore oil and wind opportunities with high rates of return. The path forward for AOI is more complicated and does warrant a few comments.”
9. New Fortress Energy Inc. (NASDAQ:NFE)
Number of Hedge Fund Holders: 21
Dividend Yield as of October 28: 0.73%
New Fortress Energy Inc. (NASDAQ:NFE) is a New York-based integrated gas-to-power infrastructure company that supplies energy and development services to end-users worldwide. The company offers natural gas procurement and liquefaction, storage and regasification units, and liquefied natural gas carriers.
Jefferies analyst Sam Burwell on October 19 initiated coverage of New Fortress Energy Inc. (NASDAQ:NFE) with a Buy rating and a $65 price target. He believes the "Option Value" of energy is up again, supported by a constrained capital cycle. While this is most pronounced in oil & gas, it is also seen in energy transition names, said the analyst, who thinks energy's "Option Value can stay higher for longer" without a significant increase in investment across the sector.
According to Insider Monkey’s data, 21 hedge funds were bullish on New Fortress Energy Inc. (NASDAQ:NFE) at the end of the second quarter of 2022, compared to 19 funds in the prior quarter. Michael Novogratz’s Fortress Investment Group is the largest position holder in the company, with 13.4 million shares worth $530.2 million.
8. NiSource Inc. (NYSE:NI)
Number of Hedge Fund Holders: 23
Dividend Yield as of October 28: 3.63%
NiSource Inc. (NYSE:NI) is headquartered in Merrillville, Indiana, and it operates as a regulated natural gas and electric utility company in the United States. On August 9, NiSource Inc. (NYSE:NI) declared a $0.235 per share quarterly dividend, in line with previous. The dividend is payable on November 18, to shareholders of the company as of October 31. NiSource Inc. (NYSE:NI)’s dividend yield on October 28 came in at 3.63%. It is one of the best dividend stocks to invest in.
On October 24, Guggenheim analyst Shahriar Pourreza reiterated a Buy rating on NiSource Inc. (NYSE:NI) but lowered the firm's price target on the stock to $27 from $32.
According to Insider Monkey’s data, 23 hedge funds were long NiSource Inc. (NYSE:NI) at the end of the second quarter of 2022, with combined stakes worth $389 million, compared to 28 funds in the prior quarter worth $607 million. Israel Englander’s Millennium Management is the largest position holder in the company, with 5.2 million shares valued at nearly $154 million.
7. BP p.l.c. (NYSE:BP)
Number of Hedge Fund Holders: 27
Dividend Yield as of October 28: 4.35%
BP p.l.c. (NYSE:BP) is a London-based energy firm which operates through Gas & Low Carbon Energy, Oil Production & Operations, Customers & Products, and Rosneft segments. It is one of the best dividend stocks to consider. On October 17, BP p.l.c. (NYSE:BP) agreed to acquire Archaea Energy Inc. (NYSE:LFG) for nearly $26 per share in cash, or a total enterprise value of $4.1 billion, including $800 million of net debt.
HSBC analyst Kim Fustier on October 24 upgraded BP p.l.c. (NYSE:BP) to Buy from Hold with a 530 GBp price target. European oil firms have "visibly lagged" U.S. peers in the recent rally, creating an "unjustified" valuation gap, the analyst told investors. The analyst thinks macro drivers should continue to lead the sector higher and oil stocks should act defensively if the economic environment deteriorates further. She cited valuation for the upgrade of BP p.l.c. (NYSE:BP) and believes that oil names can continue to perform on higher crude prices into the end of this year.
According to Insider Monkey’s data, 27 hedge funds were bullish on BP p.l.c. (NYSE:BP) at the end of June 2022, with combined stakes worth about $1.8 billion. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the biggest stakeholder of the company, with 26.5 million shares amounting to $750.4 million.
6. EOG Resources, Inc. (NYSE:EOG)
Number of Hedge Fund Holders: 43
Dividend Yield as of October 28: 2.24%
EOG Resources, Inc. (NYSE:EOG) is a Texas-based company that explores for, develops, produces, and markets crude oil, natural gas, and natural gas liquids. On September 29, EOG Resources, Inc. (NYSE:EOG) declared a $0.75 per share quarterly dividend, which is payable on October 31, to shareholders of record on October 17. EOG Resources, Inc. (NYSE:EOG)’s dividend yield on October 28 stood at 2.24%.
Citi analyst Scott Gruber on October 25 raised the price target on EOG Resources, Inc. (NYSE:EOG) to $150 from $139 and reaffirmed a Buy rating on the shares ahead of the Q3 results. The analyst refreshed his model to capture EOG Resources, Inc. (NYSE:EOG)’s latest Q3 hedge loss and cash settlement payments for other hedges, as the company moves towards hedging less of its production going forward.
Among the hedge funds tracked by Insider Monkey, EOG Resources, Inc. (NYSE:EOG) was part of 43 public stock portfolios at the end of the second quarter of 2022, compared to 49 funds in the earlier quarter. Harris Associates held the leading position in the company, comprising 7.6 million shares worth $838.3 million.
Like Exxon Mobil Corporation (NYSE:XOM), Halliburton Company (NYSE:HAL), and Chesapeake Energy Corporation (NASDAQ:CHK), EOG Resources, Inc. (NYSE:EOG) is one of the top natural gas dividend stocks to consider.
Here is what Oakmark Select Fund has to say about EOG Resources, Inc. (NYSE:EOG) in its Q1 2022 investor letter:
“EOG Resources (NYSE:EOG) (+36%), was among our top contributors in the quarter as oil prices rallied due to tight supplies, which were then exacerbated by the Russian invasion of Ukraine. Although their share prices have increased considerably, both companies still look quite undervalued even using longer term oil prices in the $65-70 dollar range. Meanwhile, if times are good over the next couple of years, we expect these companies to return significant percentages of their market caps to shareholders.”
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Disclosure: None. 10 Best Natural Gas Dividend Stocks To Buy is originally published on Insider Monkey.
