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South Jersey Industries - Slow and Steady

It has been increasingly difficult to find undervalued dividend growth stocks to buy in this overvalued market. But even now, there are pockets of value, and one comes across a stock that is not well followed. One such stock is South Jersey Industries (NYSE:SJI). The company is a combination of regulated utilities, midstream pipeline, and other business focusing on renewables. South Jersey Industries is not high growth stock, but it does grow slow and steady. In turn this has allowed the company to raise the dividend for 22 consecutive years making it a Dividend Contender and pay a dividend for 70 straight years. The current yield is approximately 4.4% and the stock is likely undervalued in an arguably overvalued market. Utilities yielding over 4% can be good buys. I view South Jersey Industries as a long-term buy.

Overview of South Jersey Industries

South Jersey Industries traces its founding to 1910. Today, the company buys, transports, stores, and sells natural gas. The utility operates in three segments: SJI Utilities, SJI Midstream, and South Jersey Energy Solutions. This divides the regulated utilities of South Jersey Gas and Elizabethtown Gas, the midstream PennEast Pipeline (20% interest), and the renewables and energy management business. Elizabethtown Gas was acquired in 2018. The company owns and operates rooftop solar generation at corporate sites, fuel cells, and is investing in renewable natural gas projects. Additionally, the utility owns oil, gas, and mineral rights in the Marcellus Shale region of Pennsylvania. The PennEast pipeline comes from this region to New Jersey. South Jersey owns roughly 10,000 miles of distribution and transmission pipeline and serves over 700,000 total customers (~407,000 South Jersey Gas and ~303,000 Elizabethtown Gas). Revenue is roughly 70-80% regulated and 20-30% unregulated. Total revenue was about $1,541M in 2020 and $1,682 in the LTM.

Revenue and Margins

South Jersey Industries is primarily a regulated utility focusing on natural gas combined with unregulated operations that focus on transmission of natural gas and also renewables…

Please read the complete article at my profile on Seeking Alpha for South Jersey Industries – Slow and Steady.


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