$17 Stock For Steady Income?

MDU Resources Group, Inc. ($MDU)

MDU Resources Group, Inc. is a regulated utility firm that provides natural gas and electric utility services to low population, rural states including: Montana, North Dakota, South Dakota, Idaho, and Wyoming.

The company has been in business since 1924. And, MDU Resources has paid a dividend every year for the past 87 years.

I like stocks that operate in rural and low population areas, because these firms often get very little attention from Wall Street. And when it comes to stability, MDU Resources is a fairly consistent performer. However, recent events have skewed the firm’s stock.

For many years, MDU Resources owned and operated a construction firm as well as a building materials supplier.

In the 2020’s, however, MDU Resources decided to narrow its corporate focus and concentrate on the company’s core utility business. As a result, MDU Resources spun-off its building materials division, Knife River Corporation, $KNF, in 2023. And, the company spun-off its construction ventures, Everus Construction Group, Inc. $ECG, in late 2024.

These spin-offs resulted in MDU Resources cutting its dividend.

And, the spin-offs also caused MDU Resources stock to decline from more than $30 per share in 2023, to the firm’s current stock price of $16.46.

Many stock screeners display MDU Resources 10-year returns as negative. But, with the spin-offs factored in, MDU Resources has actually delivered an average annual total return of 12.36%.

On top of this, MDU Resources is currently paying a 3.37% starting dividend yield.

And, this is the part that inspired today’s write-up, MDU Resources is now raising its dividend at a rate that outpaces inflation. For years, this business would issue paltry 2-3% annual dividend raises. But MDU Resources has recently announced a 7.7% dividend increase.

MDU Resources projects a long-term 6-8% earnings per share growth rate. The company is also targeting a dividend payout ratio between 60-70%.

The company’s current payout ratio is 57.14%, and that’s after the recent dividend raise.

And while I don’t have a crystal ball, the 6-8% earnings growth rate and payout ratio below the firm’s targeted goal both indicate that MDU Resources has the potential to issue future inflation-beating dividend raises.

• Forward PE ratio of 17.08

• 3.37% starting dividend yield

• 5-year dividend CAGR of -7.90%

• Payout ratio of 57.14

• 10-year average annual total return of 12.36%

This special report is titled “$17 Stock For Steady Income?“ for a reason.

MDU Resources Group, Inc. isn’t for everyone. But, this could be an interesting dividend stock if you’re looking for an income investment that operates in a stable industry and has a long track record of paying dividends — yet also costs less than $20 per share.

At under $17 per share, and currently paying $0.56/share in total annual dividends, an investor could build a sizable position in this company by simply investing their: cash back credit rewards points, high-yield savings account interest, sell-side options premiums, Twitter ad revenue earnings, etc…