Updated 3/26
Star Group, L.P. (NYSE: SGU) might not show up on your radar unless you live in the Northeast or Mid-Atlantic and get your heating oil or propane from them. But make no mistake, this is a company with a stable, well-rooted presence in a space most people overlook—until the temperatures drop. SGU handles heating fuel delivery and HVAC services, and while that business may seem boring to some, for dividend investors, boring can be beautiful.
This company doesn’t make headlines, and that’s part of the charm. It keeps its head down, generates solid cash flow, and pays out a yield that turns heads if you’re in the income-focused camp.
Recent Events
Over the past year, SGU stock has quietly surged over 30%, significantly outpacing the broader market. The most recent earnings report confirmed what the price action has been hinting at: Star Group has been doing more with less. Despite a 7.6% decline in revenue, earnings per share rocketed up over 150% year-over-year in the latest quarter. That’s not something you see every day from a company that deals in heating oil.
That type of profit growth in the face of falling revenue usually signals one thing—stronger margins. Whether it was lower input costs, better operating efficiencies, or favorable weather-driven demand, SGU squeezed more value out of every dollar.
The company stuck with its dividend, paying out in early February as expected. There’s no flash here, just follow-through.
Key Dividend Metrics
📈 Dividend Yield: 5.30%
💰 Annual Dividend: $0.69 per share
🧮 Payout Ratio: 49.64%
📅 Dividend Frequency: Quarterly
📊 5-Year Average Yield: 5.56%
🛡️ Dividend Support: $95M in free cash flow
🚀 1-Year Share Price Gain: +30.04%
Dividend Overview
Let’s get to the meat of it: the yield. A 5.3% dividend in today’s environment stands out—especially when it’s not backed by a shaky business model or an overextended balance sheet. That’s not the case here. SGU is anchored by dependable cash flows tied to essential services. Heating your home isn’t optional, and that’s a major advantage when economic uncertainty is swirling.
The dividend amount hasn’t moved much in recent years, but the company hasn’t needed to juice the payout to keep investors interested. The yield already sits above most dividend benchmarks, and there’s a quiet confidence in keeping it steady. No gimmicks, just consistency.
Dividend Growth and Safety
SGU doesn’t fall into the classic “dividend growth” bucket. The payout’s been flat for a while. But stability in uncertain sectors can be more valuable than unpredictable growth. At just under a 50% payout ratio, there’s ample breathing room to sustain the dividend even in a down year.
What really underpins the safety here is the company’s cash generation. Levered free cash flow over the past year came in at $95 million—plenty to cover the dividend and still keep operations running smoothly. Heating fuel demand may fluctuate, but SGU has built a model that hums along through those ups and downs.
Chart Analysis
Market Cycle Positioning
The chart of Star Group, L.P. (SGU) reveals a clear transition that began taking shape late in the previous year and has continued steadily through early 2025. If we’re viewing this through the lens of the Wyckoff Market Cycle, SGU appears to have moved past accumulation and is firmly in the markup phase.
From April through October of last year, the stock was trading sideways with low volatility and declining volume. This was textbook accumulation. Price hugged the 50-day and 200-day moving averages for months, lacking any real momentum. The flatness during that stretch, coupled with the volume behavior, suggests large players were quietly building positions while retail interest remained low.
Things began to change around mid-November. A breakout from the consolidation range occurred with strong price action above both moving averages. That move marked the start of markup. Since then, SGU has been forming higher highs and higher lows, with the 50-day average pushing up and recently crossing above the 200-day—a classic golden cross. That’s often a technical sign of a shift in sentiment from neutral to bullish.
Recent Price Action and Volume
Looking closely at the most recent five candles, the stock is showing some signs of short-term exhaustion. After a steep run-up in March, the last few candles reflect some indecision. There are small-bodied candles near the highs with wicks on both ends, a sign that buyers and sellers are starting to wrestle for control. These aren’t dramatic reversals, but they do suggest the strong bullish momentum may be cooling for the moment.
Volume has been relatively light, particularly during this last leg up. That’s something to watch. The earlier breakout in January was backed by stronger volume, helping confirm the move. This recent push has come with less participation, which can mean fewer committed buyers at these levels. If volume doesn’t pick up, there’s potential for a retest of support around the 50-day moving average.
Moving Averages and Trend Strength
Both the 50-day and 200-day moving averages are now sloping upward, with price well above both. This separation between price and the longer-term average is typically a sign of strength in the trend. The crossover of the 50-day above the 200-day confirms the transition into a more sustained uptrend.
However, the distance between the current price and the 200-day has widened significantly, which could suggest the move is starting to stretch. Pullbacks to mean levels are natural in strong uptrends, so a cooling period wouldn’t be out of the ordinary here.
RSI Behavior
The Relative Strength Index (RSI) has been steadily rising since the beginning of the year and is currently near the higher end of its range, but it hasn’t yet crossed into extreme overbought territory. This supports the idea that the trend remains strong but is approaching a level where some consolidation could occur. The RSI is behaving as it typically does in a healthy markup phase—staying elevated without flashing major warning signals.
Volume Patterns
Volume earlier in the cycle provided the fuel for the move, particularly during November and again in late January. But more recently, the lighter volume suggests fewer new buyers are jumping in at this level. While that doesn’t break the uptrend, it does take away some of the momentum that initially drove the move higher.
That kind of quiet volume on the highs can sometimes lead to a period of sideways movement or a small dip, giving the market time to consolidate gains before pushing higher again. For now, SGU seems to be pausing rather than reversing.
Analyst Ratings
🔍 Analyst coverage for Star Group, L.P. (SGU) remains limited, which isn’t unusual given its focused footprint in the fuel distribution space. While it doesn’t attract widespread Wall Street attention, there have been a couple of notable shifts in sentiment from those who do follow the name.
📈 In February 2025, SGU received an upgrade from a “buy” to a “strong-buy” rating. The upgrade was fueled by the company’s strong fiscal Q1 results, where net profit climbed to $32.6 million. A colder-than-usual winter helped boost heating fuel demand, and the company also benefited from recent acquisitions that expanded its customer base and volume. That combination of operational tailwinds and strategic execution impressed analysts enough to warrant a more bullish stance.
📉 Rewinding a bit, SGU had been downgraded in December 2024 from “strong-buy” to “buy.” The concern back then centered around softness in revenue growth and a balance sheet that showed signs of pressure due to its debt levels. Although earnings were holding up, the market seemed cautious about whether SGU could maintain momentum if margins tightened or demand pulled back in a warmer season.
🎯 Despite the back-and-forth in ratings, the consensus price target for SGU currently sits at around $13.00. That’s right in line with where the stock is trading now, suggesting analysts see it as fairly valued at the moment. The stock’s recent run-up seems to have brought it in sync with those expectations, at least for now.
🛠️ The bottom line from the analyst community: SGU’s recent performance has improved sentiment, but the stock isn’t flying under the radar anymore. Any new upside will likely depend on continued margin strength or further strategic growth moves.
Earnings Report Summary
A Cold Start That Worked in Their Favor
Star Group kicked off its fiscal 2025 with a solid first quarter, even as revenue dipped. Total sales came in at $488.1 million, down from $528.1 million in the same stretch last year. The drop wasn’t about lost business—prices for petroleum products were just lower across the board. So, even though they sold a bit more, they earned slightly less from each gallon.
And they did sell more. Home heating oil and propane volumes ticked up to 82.4 million gallons, which was a 2.8% increase. That’s no small feat considering the customer base saw a little attrition. But a couple of acquisitions helped bridge that gap, and Mother Nature played along with colder weather than last year, boosting demand.
More Profit, Less Noise
While revenue slipped, profits told a different story. Net income jumped to $32.9 million for the quarter—almost double the figure from last year. That gain wasn’t just from selling more fuel. A large part of it came from adjustments in the value of derivative contracts. Toss in slightly better margins and reduced depreciation costs, and it’s easy to see how the bottom line fattened up.
Tax expenses did rise, eating into some of that gain, but overall, the quarter showed healthy profit expansion.
EBITDA Moves in the Right Direction
Adjusted EBITDA, which strips out some of the noise, landed at $51.9 million—up nearly $3 million year over year. What really drove that was the contribution from newly acquired operations and stronger per-gallon margins in their base business. Even though the legacy side of the business saw a slight dip in volume, they made more on what they did sell.
Leadership Sounds Confident
CEO Jeff Woosnam summed it up pretty clearly: colder temperatures, even if not quite back to historical averages, helped. They saw growth in both product delivery and service and installation work. The company seems focused on being aggressive with acquisitions, which continue to bolster results quarter after quarter.
There’s a sense of quiet confidence coming out of this report. The fundamentals are holding up, margins are improving, and strategic moves are adding real value. Even with lower prices in the fuel market, Star Group has found ways to turn the environment into a net positive—something that not every company in the energy space can say right now.
Financial Health and Stability
While SGU is on the smaller side with a market cap just above $450 million, its financials pack a punch. The company is squeezing a nearly 20% return on equity and posting an operating margin just under 10%. For a business that involves trucks, fuel, and home service calls, those numbers show solid execution.
Debt is one of the few red flags to watch. With $307 million in total debt and a debt-to-equity ratio north of 100%, SGU carries some financial leverage. The current ratio of 0.83 also suggests short-term obligations could become tight under stress. However, the $48 million in cash on hand and healthy cash flows help balance the scales.
On a valuation basis, it’s hard to call this stock expensive. Enterprise value to EBITDA sits just under 6x, and the stock trades at 9.5x earnings. That’s a modest multiple for a company that has proven it can deliver profits even in a soft top-line environment.
Valuation and Stock Performance
SGU is still trading well below the radar of most investors, and the price suggests it’s still being valued like a no-growth utility. Price-to-sales sits at just 0.26, and the price-to-book ratio is only 1.55. That’s the kind of setup that tends to appeal to value investors—especially those who like to collect dividends while waiting for market sentiment to catch up.
Over the past 12 months, the stock has climbed more than 30%, and yet it hasn’t outgrown its valuation. The company’s beta is just 0.46, meaning the stock moves less than half as much as the overall market. For long-term dividend investors, that lower volatility profile makes SGU a calming presence in the portfolio.
Risks and Considerations
Of course, there are risks here. The most obvious is seasonality and weather. A mild winter can knock down fuel volumes and hurt the top line. SGU’s reliance on heating fuel sales creates an unavoidable dependence on temperature.
Debt levels are another thing to monitor. The balance sheet isn’t falling apart, but it doesn’t leave a lot of cushion in a downturn. Also, while the business model is stable, it’s not immune to long-term shifts. As the push for electrification and cleaner energy sources grows, reliance on heating oil could face gradual pressure. That said, any structural transition is likely to play out over a decade or more.
Lastly, institutional ownership sits around 44%, and insiders hold close to 15%. That signals a decent level of alignment, but not a deep moat of institutional support.
Final Thoughts
Star Group isn’t going to show up on hot stock lists, and it’s not the kind of name that generates buzz. But that’s part of its strength. It does its job, sticks to its core business, and pays out a dividend that makes a real difference in investor income streams.
In a market full of flashy plays and speculative narratives, SGU is refreshingly simple. It delivers fuel, generates cash, and sends a check to shareholders every quarter. For dividend-focused investors who value predictability, stability, and a solid yield, this is a name that deserves more attention than it gets.
Sometimes the best investments are the ones that don’t make noise—they just quietly deliver.