Updated 3/11/2025
New Jersey Resources Corporation (NJR) is a company that has carved out a stable position in the energy sector. At its core, NJR is a regulated natural gas distributor serving over half a million customers in New Jersey. That steady, regulated revenue stream provides a foundation for consistent earnings, which is exactly what long-term income investors like to see.
But NJR isn’t just about natural gas distribution. The company has also expanded into clean energy, investing in solar and other renewable initiatives. This diversification could position it well for the future, but at the same time, it comes with costs. Right now, the stock trades at $48.48 with a market cap of $4.77 billion. While not a high-growth play, NJR has long been a favorite among dividend investors due to its reliable payouts.
For those looking to build a steady income stream, let’s take a closer look at NJR’s dividend strength, financial stability, valuation, and the risks that come with it.
🔑 Key Dividend Metrics
💰 Dividend Yield: 3.78% (slightly above its 5-year average)
📈 5-Year Dividend Growth Rate: 6.2% (slow and steady)
🔄 Payout Ratio: 52.41% (moderate and sustainable)
📆 Ex-Dividend Date: March 11, 2025
💵 Next Dividend Payment: April 1, 2025
Dividend Overview
For income-focused investors, NJR’s dividend is one of its biggest selling points. Right now, the stock is yielding 3.78%, which is a bit above its historical average of 3.53%. That suggests investors buying at current prices are locking in a better-than-usual yield.
Over the years, NJR has built a reputation for consistency. Its dividend payments have been steady and increasing, which is exactly what long-term investors want from a utility-like stock. This reliability is tied to the company’s core natural gas business, where revenue is regulated and more predictable than companies in other industries.
Dividend Growth and Safety
While NJR isn’t known for aggressive dividend growth, it has a 5-year dividend growth rate of 6.2%, showing that payouts are increasing at a reasonable pace. The most recent hike was 3.5%, which is slower but still a positive sign that management remains committed to rewarding shareholders.
One key metric dividend investors always watch is the payout ratio, which in NJR’s case is 52.41%. That means just over half of its earnings are going toward dividends, leaving plenty of room for reinvestment and financial flexibility.
However, one potential concern is negative free cash flow (-$306.64M). While the company is generating strong operating cash flow ($372M), it is spending heavily on infrastructure and clean energy investments. If this trend continues for too long without a payoff, it could put some pressure on dividend growth down the road.
Chart Analysis
The price action in this NJR chart is showing some encouraging signs, with a mix of upward momentum and strong support levels holding firm. The stock has been trending higher, but it hasn’t been without its fluctuations along the way.
Moving Averages and Trend Strength
The 50-day and 200-day simple moving averages are both sloping upwards, which generally points to a sustained uptrend. The stock has been bouncing between these two levels, using the 50-day moving average as a dynamic support zone in recent months.
A notable moment in this chart was when the price dipped toward the 200-day moving average but managed to hold above it. That kind of price action often signals that longer-term investors are stepping in to accumulate shares at perceived value levels. Now, with the stock trading above both moving averages again, buyers seem to have regained control.
Volume and Market Participation
Volume has been relatively steady, but there are key moments where activity has surged, indicating strong interest. The most noticeable volume spike happened around mid-year, where trading activity shot up significantly. That kind of large-volume movement often signals institutional buying or an important catalyst driving investor interest.
More recently, volume has picked up again, suggesting that momentum is building. When volume increases on up days rather than down days, it reinforces the idea that buyers are in control. If this continues, it could provide the fuel for further upside.
Relative Strength Index and Buying Pressure
The RSI indicator has been trending higher but is not yet in overbought territory. This suggests that while there has been strong buying interest, the stock hasn’t reached an extreme level where a pullback might be imminent. Instead, the RSI is sitting in a healthy range, showing that momentum is intact without being overextended.
The last few RSI movements also align well with the price action. There was a cooling-off period in early winter when the stock consolidated, which is reflected in the RSI dipping lower. But as the price has started climbing again, the RSI is rising as well, signaling renewed strength.
Recent Price Action and Candlestick Behavior
The stock closed at 48.48 after trading within a relatively tight range for the session. The recent candles show higher lows forming, which is typically a sign of accumulation. Buyers have been stepping in at increasingly higher prices, indicating that demand is supporting the current uptrend.
The most recent high of 48.81 suggests that the stock is testing resistance levels. If it breaks above that level with strong volume, it could indicate a continuation of the upward trend. However, if it struggles to break through, a period of consolidation may be needed before another push higher.
Analyst Ratings
📊 In recent months, New Jersey Resources Corporation (NJR) has received both upgrades and downgrades from analysts, reflecting mixed opinions on the company’s current performance and future outlook. The consensus 12-month price target stands at $51.75, indicating a potential upside from current levels.
Upgrades
🔼 On December 12, 2024, JPMorgan Chase & Co. upgraded NJR from Neutral to Overweight, raising the price target from $52 to $54. The upgrade was driven by NJR’s strong earnings growth, with the company reporting a 74% increase in earnings and a 5% rise in sales for the latest quarter. Analysts pointed to improving fundamentals, a stable revenue stream from regulated operations, and potential long-term benefits from the company’s clean energy investments as reasons for a more bullish stance.
Downgrades
🔽 On February 5, 2025, Guggenheim maintained a Neutral rating on NJR but revised the price target downward to $54. The downgrade came amid concerns about valuation after the stock’s recent rally. Analysts cited rising capital expenditures, potential regulatory hurdles in the clean energy segment, and pressures from higher interest rates as factors that could weigh on NJR’s growth. While the firm acknowledged the company’s stable dividend and strong cash flow generation, it suggested the stock might be fairly valued at current levels.
📉 These mixed ratings suggest that while NJR remains fundamentally strong, factors like valuation and macroeconomic conditions will likely influence its trajectory in the near term.
Earnings Report Summary
New Jersey Resources (NJR) kicked off the fiscal year with a strong first-quarter performance, showing solid growth across its business segments. The company reported net income of $131.3 million, or $1.32 per share, a noticeable jump from the $89.4 million, or $0.91 per share, it posted in the same period last year. This boost was driven by both higher utility rates and strategic moves in clean energy.
The natural gas distribution segment, New Jersey Natural Gas (NJNG), was a major contributor to the positive results. It brought in $66.9 million in net financial earnings, up from $51.4 million a year ago. The increase came after the state approved a rate hike, which allowed NJNG to better recover costs tied to infrastructure upgrades and operations.
Clean Energy Ventures (CEV) was another standout. The division pulled in $48.1 million in earnings, a massive increase from just $10.5 million in the prior year’s quarter. A big reason for the jump was the sale of a 91-megawatt solar portfolio for $132.5 million. NJR has been reshaping its clean energy portfolio, and this sale helped unlock value while giving the company more capital to reinvest in other renewable projects.
The storage and transportation business also saw an uptick, contributing $5.7 million in net financial earnings compared to $3.6 million the year before. Stronger operating revenues and lower maintenance costs helped drive the improvement.
Energy Services, which plays a role in managing assets and natural gas supply, remained stable with earnings of $7.8 million—right in line with last year’s results. Even in a changing energy market, this segment held steady, showing resilience.
Home Services and other smaller operations also made a quiet but notable improvement. The segment posted a modest $0.6 million in earnings, reversing a small loss of the same amount in the previous year.
Overall, NJR’s first quarter showed solid execution on multiple fronts. With a boost from regulatory rate approvals, a smart approach to clean energy assets, and steady contributions from its core businesses, the company appears to be in a strong financial position heading into the rest of the year.
Financial Health and Stability
Strengths
- Net profit margin of 18.25%, showing solid profitability for a utility-like business
- Return on equity (ROE) of 15.15%, meaning the company is using capital efficiently
- Strong operating cash flow ($372M) supporting dividend payments
Weaknesses
- Current ratio of 0.89, meaning the company has more short-term liabilities than liquid assets
- Free cash flow is in the red due to heavy capital expenditures
- The enterprise value to EBITDA ratio of 11.43, suggesting the stock is not particularly cheap
NJR’s balance sheet isn’t perfect, but it’s not alarming either. The company is making long-term investments, and while these require cash now, they could lead to future growth. Still, investors should keep an eye on how the debt load evolves, especially if interest rates remain high.
Valuation and Stock Performance
Right now, NJR trades at a trailing price-to-earnings (P/E) ratio of 14.33 and a forward P/E of 15.34. That’s fairly reasonable for a utility-style business, though it doesn’t scream “undervalued” either.
Other valuation measures show a similar picture:
- Price-to-Book (P/B) ratio of 2.06, meaning the stock is trading slightly above its book value
- Price-to-Sales (P/S) ratio of 2.61, suggesting it’s valued moderately relative to revenue
- Enterprise value to EBITDA of 11.43, indicating a fair valuation compared to earnings before interest and taxes
In terms of stock performance, NJR has gained 8.49% over the past year, which is about in line with the broader market. That’s respectable for a dividend stock, though it’s not the kind of name you buy for explosive returns.
Risks and Considerations
Interest Rate Sensitivity
Like most companies in the utility and infrastructure space, NJR carries debt. If interest rates stay elevated, borrowing costs could increase, eating into profits and limiting future dividend hikes.
Negative Free Cash Flow
The company’s free cash flow is currently negative due to large capital expenditures. While these investments could pay off in the long run, they also pose a short-term risk. If free cash flow doesn’t improve, NJR may need to slow down its dividend increases.
Energy Market Volatility
While NJR’s natural gas business is relatively stable, its expansion into clean energy exposes it to potential regulatory changes and shifts in energy prices. If certain projects don’t perform as expected, it could impact overall returns.
Short Interest
Currently, about 3.26% of NJR’s float is sold short, meaning some investors are betting against the stock. This isn’t an extreme level of short interest, but it suggests that not everyone is convinced about NJR’s near-term prospects.
Final Thoughts
For dividend investors, NJR has a lot to like:
- A solid yield of 3.78%, higher than its historical average
- A payout ratio of 52.41%, which leaves room for continued dividends
- A stable, regulated business that provides predictable cash flow
At the same time, there are some concerns worth watching:
- Free cash flow is negative, which could limit dividend growth if it persists
- Debt and interest rate risks could pressure future profitability
- Valuation is reasonable, but the stock isn’t necessarily a bargain
Overall, NJR fits well within a dividend-focused portfolio for those looking for stability and income. The stock may not deliver high growth, but it has a strong history of paying and increasing dividends, which is exactly what long-term investors seek.
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