Updated 3/6/25
Chesapeake Utilities Corporation (CPK) is a well-established energy company providing natural gas and electricity across multiple states, including Delaware, Maryland, and Florida. The company operates in a regulated environment, which offers stability in earnings and cash flow—two key factors for dividend investors.
Unlike volatile sectors that swing with the economy, utility stocks like Chesapeake tend to offer consistent, reliable income. CPK has been growing its operations steadily, increasing its customer base and expanding infrastructure, all while maintaining a solid track record of paying and growing dividends.
For investors seeking a balance of income and long-term growth, Chesapeake Utilities stands out as a steady performer. But is it a strong dividend investment today? Let’s break it down.
Key Dividend Metrics
🔹 Dividend Yield: 2.01%
🔹 Annual Dividend: $2.56 per share
🔹 5-Year Average Dividend Yield: 1.79%
🔹 Payout Ratio: 47.72% (indicating sustainability)
🔹 Dividend Growth Streak: Over 20 years
🔹 Ex-Dividend Date: March 14, 2025
🔹 Next Payment Date: April 7, 2025
Dividend Overview
Chesapeake Utilities isn’t a high-yield stock, but its 2.01% dividend yield is higher than its historical average of 1.79%, showing that the yield is currently more attractive than usual. The company’s $2.56 annual dividend per share provides a solid income stream, backed by strong earnings growth.
One of the most reassuring aspects of this dividend is its payout ratio of 47.72%. This means Chesapeake Utilities is distributing less than half of its earnings as dividends, leaving plenty of room for reinvestment and future increases. The company has built a reputation for dependable dividend payments, and given its track record, future hikes are likely.
Investors looking to capture the next payout should keep in mind that the ex-dividend date is March 14, 2025, with the next dividend payment scheduled for April 7, 2025.
Dividend Growth and Safety
For over two decades, Chesapeake Utilities has consistently increased its dividend. That kind of reliability is a rare and valuable trait for income investors. Unlike some high-yield stocks that struggle to maintain their payouts, Chesapeake focuses on slow, steady growth.
The payout ratio suggests that dividend payments are well-covered by earnings, and with quarterly earnings up 44.8% year-over-year, the company has ample flexibility to continue raising dividends in the years ahead.
The stock also has a beta of 0.61, meaning it tends to be less volatile than the broader market. That’s an important feature for dividend investors who prefer stability over wild price swings.
Chart Analysis
Overall Trend
The stock price of Chesapeake Utilities Corporation (CPK) has been on a steady uptrend over the past year, showing resilience even through periods of volatility. The chart reveals a strong rally that started in mid-2024, followed by a series of pullbacks that were largely supported by the 50-day moving average. Despite some fluctuations, the stock has maintained its upward momentum, with higher highs and higher lows forming along the way.
Moving Averages
The 50-day moving average (orange line) has acted as a dynamic support level for much of the trend. The stock has tested this level multiple times, bouncing off it in periods of weakness, which suggests that short-term buyers are stepping in on dips. The 200-day moving average (blue line) is trending upward as well, reinforcing the long-term bullish sentiment.
What stands out is the moment when the 50-day moving average crossed above the 200-day moving average in mid-2024—commonly known as a golden cross. This is typically a strong bullish signal, and the stock’s performance since then has reflected that strength.
Volume and Momentum
Volume levels have remained relatively stable, with occasional spikes corresponding to sharp price movements. The highest volume days tend to align with either major breakouts or pullbacks, which indicates strong institutional activity at key price levels. A notable spike in July coincided with a strong rally, suggesting that big buyers stepped in at that time.
Looking at the relative strength index (RSI) at the bottom of the chart, the stock has been hovering near the upper end of the range, but not in extreme overbought territory. This suggests that while the stock has had strong momentum, it isn’t necessarily overextended. The RSI has remained above 50 for much of the trend, which reinforces the idea that the stock is in a bullish phase.
Recent Price Action
In the past few weeks, the stock has been pushing higher, closing at 127.19. The most recent candles show a series of small-bodied candles with relatively equal highs and lows, suggesting some consolidation after the latest rally. However, the fact that the price remains above both moving averages is a positive sign.
The last five candles indicate some indecision, with wicks on both ends, suggesting that buyers and sellers are in a bit of a tug-of-war. There hasn’t been a clear sign of heavy distribution, so this could simply be a pause before another move higher.
Support and Resistance Levels
The most recent support level appears to be near the 50-day moving average, around the 122–123 range. If the stock pulls back to this level and holds, it would reaffirm the current uptrend. Below that, the 200-day moving average near 115 would be another key level to watch.
On the resistance side, the stock previously hit a high near 134, which could act as a potential ceiling if it continues to push higher. If it breaks through that level with strong volume, it could indicate the next leg of the rally.
Analyst Ratings
Chesapeake Utilities Corporation (CPK) has recently seen a variety of analyst opinions, reflecting both positive and cautious sentiments.
Upgrades:
- On January 10, 2024, RBC Capital upgraded CPK from “Sector Perform” to “Outperform,” raising the price target from $111 to $123. This upgrade was attributed to the company’s strong operational performance and growth prospects.
Downgrades:
- Conversely, on October 2, 2023, RBC Capital lowered its price target for CPK from $124 to $117, maintaining a “Sector Perform” rating. This adjustment reflected concerns about potential earnings pressure following the acquisition of Florida City Gas.
Consensus Price Target:
As of the latest data, the consensus among analysts is a “Hold” rating for CPK, with an average 12-month price target of approximately $123. This target suggests that analysts anticipate the stock to trade near its current levels in the foreseeable future.
Earning Report Summary
Chesapeake Utilities just wrapped up another solid quarter, showing steady growth and continued expansion in its energy delivery services. The company’s latest earnings report highlights strong financial performance, driven by smart acquisitions, infrastructure investments, and a growing customer base.
Financial Performance
For the fourth quarter of 2024, Chesapeake Utilities posted a net income of $36.7 million, with earnings per share coming in at $1.60. That’s a nice jump from the previous year’s fourth quarter, where net income was $29.5 million and EPS stood at $1.30. Revenue also climbed to $215 million, up from $190 million last year, marking a healthy 13% year-over-year increase.
What’s Driving the Growth?
Several key factors played a role in the company’s strong quarter:
- Florida City Gas Acquisition – The purchase of Florida City Gas added around $15 million to Chesapeake’s gross margin. Expanding its presence in Florida has given the company a bigger customer base and new opportunities for long-term growth.
- Infrastructure Investments – Ongoing upgrades to regulated energy infrastructure helped boost the gross margin by $8 million. These improvements are designed to strengthen reliability and efficiency.
- New Customers – More homes and businesses signed up for Chesapeake’s natural gas services, adding 5,000 new customers in just three months. This organic growth brought in an extra $4 million to the company’s bottom line.
Operational Highlights
Beyond the numbers, Chesapeake has been making moves to expand its operations:
- Pipeline Expansions – The company completed several pipeline projects in the Delmarva Peninsula and Florida, increasing its energy capacity and ability to meet demand. These projects contributed $6 million in additional gross margin.
- Propane and Energy Services – The company’s unregulated energy business, including propane distribution, saw a 10% boost in gross margin, adding another $3 million in revenue. Strong demand and improved service offerings helped drive this growth.
Managing Costs and Cash Flow
Expenses ticked up a bit, with operating costs rising to $130 million from $120 million the year before. The increase was mostly tied to the Florida City Gas acquisition and new infrastructure investments. Even with higher costs, the company kept its operating income margin steady at 39%, showing good cost control.
On the cash flow side, Chesapeake brought in $90 million from operations, giving it the flexibility to keep investing in expansion while maintaining a stable financial position.
Financial Health and Stability
Chesapeake Utilities’ financials show both strengths and areas to watch.
On the positive side, revenue has grown by 16% year-over-year, reaching $787.2 million. The company also boasts a net profit margin of 15.07% and an operating margin of 31.49%, signaling strong efficiency in its operations.
However, Chesapeake does carry a significant amount of debt. The company’s total debt stands at $1.49 billion, with a debt-to-equity ratio of 107.52%. While utilities often take on high debt loads to finance infrastructure expansion, this is something investors should monitor.
The company’s operating cash flow of $239.4 million provides some reassurance, but its levered free cash flow is negative at -$169.16 million, indicating aggressive reinvestment. This isn’t necessarily a red flag, but it does mean Chesapeake is spending heavily on future growth, which could impact dividend increases if not managed carefully.
Valuation and Stock Performance
At $127.19 per share, Chesapeake Utilities is trading near the middle of its 52-week range of $98.32 to $134.20. That suggests it’s not overly expensive, nor is it at a bargain level.
Looking at valuation metrics, the stock has a trailing P/E ratio of 24.18 and a forward P/E of 20.33. While that’s not cheap, it’s also not unreasonable for a stable, growing utility company. Chesapeake is typically valued at a premium due to its strong financial track record and consistent growth.
Other valuation metrics include:
- Price-to-book ratio of 2.10, which is reasonable for a utility stock.
- Enterprise value to EBITDA of 14.14, in line with industry norms.
From a performance perspective, Chesapeake has been a strong performer, rising 21.1% over the past year, outpacing the S&P 500’s 12% gain. The stock’s 50-day moving average is $122.72, and its 200-day moving average is $119.13, indicating that it remains in a stable uptrend.
Risks and Considerations
Every stock comes with risks, and Chesapeake Utilities is no exception. Here are some factors to keep in mind:
⚠️ Interest Rate Sensitivity – Utility stocks tend to be impacted by rising interest rates, as they rely on borrowing for expansion. Higher rates can make debt more expensive and reduce investor demand for income stocks.
⚠️ Regulatory Risks – As a regulated utility, Chesapeake’s profitability is tied to government policies and rate approvals. Unexpected regulatory changes could impact future earnings.
⚠️ Debt Levels – The company’s debt-to-equity ratio of 107.52% is on the higher side. If interest rates remain elevated, managing this debt load could become a challenge.
⚠️ Moderate Yield – While Chesapeake’s 2.01% dividend yield is respectable, some investors may prefer higher-yielding utility stocks, especially those who prioritize income over growth.
Final Thoughts
Chesapeake Utilities is a well-run company with a long history of dividend growth, stable earnings, and strong financial performance. While its dividend yield isn’t the highest in the sector, it’s backed by a sustainable payout ratio and consistent earnings growth.
The company’s low volatility, steady revenue increases, and commitment to returning value to shareholders make it a solid choice for long-term dividend investors. However, its debt load and interest rate sensitivity are factors worth keeping an eye on.
For those who value steady income with growth potential, Chesapeake Utilities presents a compelling case as a long-term investment.
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