Updated 3/11/2025
Northwest Natural Holding Company (NYSE: NWN) is a well-established utility provider that has been serving communities in the Pacific Northwest for over 160 years. It operates in a highly regulated industry, delivering natural gas to residential, commercial, and industrial customers. While utilities are not the most exciting stocks, they are often a go-to choice for investors seeking stability and consistent dividends.
For income-focused investors, NWN offers an appealing combination of steady cash flows and a long history of dividend payments. But is it still a good option in today’s market? Let’s break it down, starting with the key dividend details.
Key Dividend Metrics
📈 Dividend Yield: 4.73%
💰 Annual Dividend: $1.96 per share
🔄 5-Year Average Dividend Yield: 4.25%
📅 Next Dividend Payment: February 14, 2025
⚠️ Payout Ratio: 96.18% (a potential concern)
⏳ Consecutive Years of Dividend Increases: 68
🔄 Ex-Dividend Date: January 31, 2025
Dividend Overview
Northwest Natural is a dividend powerhouse, having increased its payout for an incredible 68 straight years. That level of consistency is rare and speaks to the company’s commitment to rewarding shareholders.
The current dividend yield of 4.73% is higher than its five-year average, making it an attractive pick for investors looking for solid income. However, the payout ratio is worryingly high at 96%, meaning almost all of the company’s earnings are going toward dividends. That leaves little room for reinvestment or growth, which could become an issue if profits don’t keep pace.
For now, the dividend looks safe, but it’s something to keep an eye on. Utilities usually have high payout ratios, but when they get too close to 100%, they become harder to sustain.
Dividend Growth and Safety
While NWN has an impressive track record of paying dividends, its growth rate has been underwhelming. In recent years, dividend increases have been modest, usually in the 1-3% range. That’s fine for investors focused purely on income, but those looking for a growing payout might be disappointed.
The biggest concern here is the payout ratio. At 96%, there isn’t much room for error. Earnings per share for the past year came in at $2.03, just barely covering the annual dividend of $1.96. If the company runs into unexpected expenses or sees a dip in earnings, it could struggle to maintain the dividend at its current level.
On the bright side, NWN operates in a regulated industry, which provides a cushion against economic downturns. The stock’s beta of 0.58 suggests that it is much less volatile than the broader market, making it a relatively safe bet for conservative investors.
Chart Analysis
The stock chart for Northwest Natural Holding Company (NWN) shows a steady upward trend over the past several months, with some notable fluctuations along the way. The presence of both the 50-day and 200-day simple moving averages helps provide a clearer picture of where the stock stands in its current cycle.
Moving Averages and Trend Direction
The 50-day moving average has crossed above the 200-day moving average, which is typically seen as a bullish signal. This suggests that the stock has regained momentum after a period of consolidation. The price is currently hovering above both moving averages, reinforcing the idea that buyers have control at this stage.
However, the stock is approaching a key resistance level near the recent highs. It has attempted to break above this level multiple times but hasn’t managed to sustain a move beyond it. This could indicate that some investors are taking profits after the recent run-up, leading to minor pullbacks.
Volume and Market Participation
Volume has remained relatively stable, though there are noticeable spikes during certain trading sessions. A large volume surge in early December coincided with a significant price move, possibly due to news or earnings-related activity. Since then, trading volume has normalized, suggesting that interest in the stock has leveled out.
If the stock makes another attempt to push past resistance, an increase in volume would be a key confirmation. Without strong buying pressure, the price may struggle to break out and could consolidate further.
Relative Strength Index (RSI)
The RSI indicator at the bottom of the chart shows that the stock has been moving in a moderate range. It is not currently in overbought or oversold territory, indicating that there is still room for movement in either direction.
A prolonged period near the overbought level could suggest that the stock is due for a pullback, while a drop toward oversold territory might present a buying opportunity. At the moment, the RSI is in a neutral zone, leaving the next directional move uncertain.
Recent Price Action
The last few trading sessions have seen a mix of indecisive candles, with small wicks on both ends. This suggests that there is some back-and-forth between buyers and sellers. The stock opened at 41.91, hit a high of 42.03, and closed at 41.48, which indicates some intraday selling pressure.
If the stock holds above the 50-day moving average, it could continue trending higher. On the other hand, a break below this level might signal a shift in sentiment, potentially leading to a retest of the 200-day moving average.
Analyst Ratings
In recent months, Northwest Natural Holding Company (NWN) has received a mix of upgrades and downgrades from analysts, reflecting differing views on its financial health and growth prospects.
📈 Stifel Nicolaus
On March 10, 2025, Stifel analysts raised their price target for NWN to $45.00 from $44.00, reaffirming a buy rating. This increase follows NWN’s latest earnings report, which met expectations after accounting for one-time items. Analysts believe NWN is positioned for strong earnings growth in 2025, driven by its acquisition of SiEnergy. The deal is expected to double the company’s annual customer growth rate to 2.0%–2.5%, making it a key driver of future revenue.
🔹 Janney Capital
On August 5, 2024, Janney upgraded NWN from neutral to buy, increasing the price target from $36 to $43. The upgrade was likely influenced by the company’s strategic direction and financial performance at the time, showing confidence in its ability to navigate challenges and capitalize on growth opportunities.
⚠️ S&P Global Ratings
Roughly three months ago, S&P Global Ratings downgraded NWN’s credit rating from A to A- due to concerns over its financial health. Analysts pointed to the company’s weak financial measures, specifically highlighting that funds from operations (FFO) relative to debt are expected to remain below 15 percent. This downgrade suggests higher borrowing costs and potential challenges in maintaining financial flexibility.
🔻 Guggenheim
On October 9, 2023, Guggenheim reduced its price target for NWN from $42 to $37, keeping a neutral rating. This suggests a more cautious outlook on the company’s near-term prospects, likely due to regulatory uncertainties and concerns over profitability.
📊 Consensus Price Target
The average one-year price target for NWN currently stands at $47.53, with individual targets ranging from a low of $42.42 to a high of $58.80. Analysts remain divided on the stock’s outlook, balancing its strong dividend history and expansion efforts against financial constraints and regulatory challenges.
These mixed opinions highlight the importance of considering both the company’s strategic initiatives and financial stability when evaluating its future potential.
Earning Report Summary
Northwest Natural Holding Company (NWN) recently released its latest earnings report, giving investors a look at how the company performed over the past quarter and full year. While the results were a bit of a mixed bag, there are some interesting takeaways, especially when looking at the company’s future plans and growth opportunities.
Financial Performance
For the full year 2024, NWN reported a net income of $78.9 million, translating to earnings per share (EPS) of $2.03. After adjusting for certain items, the adjusted EPS came in at $2.33, which was slightly lower than the previous year’s $2.59. In the fourth quarter alone, the company posted an EPS of $1.41, just a tick below analyst estimates of $1.42. Revenue for the quarter was $370.9 million, marking a 4.3% year-over-year increase, but it still fell short of projections, which had expected a figure closer to $395 million.
Operational Highlights
The company’s core natural gas distribution business remains its biggest source of revenue, serving nearly 800,000 customers in Oregon and Southwest Washington. NWN has been actively investing in infrastructure upgrades to improve reliability and keep up with demand.
On the water utility side, the company continues to expand, acquiring new assets and increasing its market presence. This diversification effort is part of a broader strategy to create additional revenue streams beyond natural gas distribution.
Strategic Moves
One of the biggest headlines from the earnings report was NWN’s acquisition of SiEnergy, a Texas-based natural gas utility. This move is expected to significantly accelerate customer growth, potentially doubling the company’s annual growth rate to between 2.0% and 2.5%. That’s a big step forward, especially in an industry where growth can sometimes be slow.
NWN is also making progress on its renewable natural gas initiatives, which align with growing environmental regulations and customer demand for cleaner energy solutions. While these projects will take time to develop, they represent a long-term investment in the future of the energy sector.
Dividend and Outlook
Dividend investors will be happy to know that NWN is staying consistent with its payouts, declaring a quarterly dividend of 49 cents per share. That keeps the annual dividend at $1.96 per share, reinforcing the company’s commitment to rewarding shareholders.
Looking ahead to 2025, NWN has set its EPS guidance between $2.75 and $2.95. This forecast reflects optimism about the impact of recent acquisitions, ongoing infrastructure investments, and operational efficiencies that should help drive future earnings growth.
Overall, while the earnings report wasn’t perfect, it shows that NWN is actively working to position itself for long-term success. With customer expansion, a focus on renewable energy, and a solid dividend track record, the company is taking steps to stay competitive in a changing energy landscape.
Financial Health and Stability
Debt and Liquidity
One of the biggest concerns with NWN is its debt load. The company currently holds $1.96 billion in total debt, with a debt-to-equity ratio of 141%. That’s quite high, even for a utility, and could limit financial flexibility in a rising interest rate environment.
Cash reserves are also on the lower side, with just $38.49 million in total cash. The company’s current ratio is 0.86, which means it has fewer short-term assets than liabilities. That’s not an immediate red flag, but it does suggest that liquidity could become an issue if unexpected expenses arise.
Cash Flow
On the cash flow front, NWN generates $200.28 million in operating cash flow, which is enough to cover its dividend payments. However, levered free cash flow is negative at -$113.77 million, indicating that the company is spending more than it is bringing in after meeting its financial obligations.
Overall, NWN’s balance sheet is not the strongest. While the company has steady cash flows, its high debt levels and low liquidity make it more vulnerable than some of its peers.
Valuation and Stock Performance
At a price-to-earnings ratio of 20.43, NWN is slightly more expensive than its historical average. However, its forward P/E of 13.97 suggests that earnings are expected to improve, which could make the stock more attractive going forward.
Here’s a quick look at some key valuation metrics:
- Price-to-Book Ratio: 1.20 (fairly valued)
- Enterprise Value/EBITDA: 10.31 (reasonable for a utility)
- Price-to-Sales Ratio: 1.40 (in line with industry norms)
Stock performance has been relatively stable. The stock’s 52-week high is $44.25, while its low is $34.82. Currently trading at $41.48, NWN is near the middle of its range. The 50-day moving average sits at $40.41, while the 200-day moving average is $39.55, suggesting a steady uptrend.
Risks and Considerations
While NWN is a solid dividend payer, there are some risks to keep in mind:
- High Payout Ratio: At 96%, the dividend is at risk if earnings don’t grow.
- Debt Load: With nearly $2 billion in debt, the company has limited financial flexibility.
- Regulatory Risks: As a regulated utility, NWN’s ability to raise rates is controlled by government agencies.
- Slow Dividend Growth: Increases have been minimal, usually around 1-3% per year.
- Limited Capital Appreciation: As a utility, NWN is unlikely to deliver significant stock price growth.
That said, the company’s stability and predictable cash flows make it appealing for investors looking for consistent income.
Final Thoughts
Northwest Natural Holding Company has a lot going for it. The stock offers a reliable 4.73% dividend yield, a 68-year history of increases, and low volatility. For investors looking for a steady income stream, it’s hard to ignore a track record like that.
However, there are some concerns. The high payout ratio means that the dividend is at risk if earnings falter. Debt levels are on the high side, and dividend growth has been sluggish. While the company’s stable operations make it a solid choice for conservative investors, those looking for strong dividend growth might want to explore alternatives.
For now, NWN remains a dependable dividend payer with a strong history, but its financial position will need to improve to keep up with its long-standing reputation.
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