New Jersey Resources (NYSE:NJR)

New Jersey Resources is a business which provides retail and wholesale energy services to customers in New Jersey and the New England Gulf Coast states and Canada. With $2.5 billion in annual revenue, NJR operates and maintains the distribution infrastructure to serve almost half a million customers.

New Jersey Natural Gas is the principal subsidiary of New Jersey Resources, it serves more than 486,000 customers. NJR Home Services offers a full line of appliance maintenance contracts and related products and services. NJR Home Services technicians are qualified to install, maintain and repair natural gas furnaces, water heaters, grills, outdoor lights and central air conditioning electrical equipment. NJR Energy Services is a leader in the wholesale energy services market and in natural gas storage. NJR Clean Energy Ventures (NJRCEV) invests in, owns and operates renewable energy projects that generate clean energy and provide low-carbon energy solutions. To date, the investment strategy has focused on solar system development, but wind and biomass energy solutions may be considered in the near future. NJRCEV seeks to invest in projects that create added value, including reducing electricity costs and carbon emissions.

NJR is trading at a fair valuation from a dividend perspective. The yield currently stands at 3.10%, a little less than the long term average which is 3.54%. The PER amounts to 16.70. Dividends are growing at a correct average annual rate of 9%. The history of successive increases is however still relatively young, with only 15 years. The distribution ratio is generous, with 59.02%, but there is still room to continue to ensure the payment of the dividend in the future and even to increase it as long as the profit does not fall.

Volatility is low and lower than our portfolio average, with 9.22%. The beta is minimal with only 0.26, highlighting the very low sensitivity of NJR to the market. The graph below speaks for itself...

The other advantage of NJR is its inverse sensitivity to dollar fluctuations ($risk=-0.43), a fall in the greenback being accompanied in principle by an increase in the value in CHF.

In conclusion, NJR is a low-risk stock, with a weak link to the market and which offers a hedge against the USD. The yield is good and the stock market performance has something surreal about it, so much so that it is not only good, but above all regular and disconnected from everything. Only the seniority of the dividend increases leaves us circumspect. NJR is a dividend stock to follow closely with a view to a possible purchase, if the company confirms its excellent dispositions in the future.