Spire (SR) is one of the oldest continuously operating independent natural gas utilities in the US. The stock price has been pressured since April 2021 due to issues with the unregulated STL Pipeline, more on that below. If Spire is forced to shut down the pipeline, it will negatively impact earnings by an estimated $0.35 per share in 2022, and the company will be forced to write off about $5.00 per share. However, the market already seems to be pricing in the worst-case scenario. There are three reasons to buy Spire now. The stock is trading near its 52-week low and is probably undervalued even after accounting for lower earnings in 2022. On the plus side, Spire’s dividend yield is approximately 4.45%, and the dividend safety is excellent. The utility has paid a dividend for 77 years in a row. In addition, the dividend has been raised for 18 consecutive years, making the stock a Dividend Contender. Considering Spire’s regulated operations and growth potential, I view Spire as a long-term buy.
Overview of Spire
Spire Inc is a public utility holding company based in St. Louis, Missouri, and traces its founding back to 1857. The utility was formerly known as the Laclede Group, trading under the symbol LG, but changed its name in 2016. An interesting historical fact is that the predecessor utility, Laclede Gas Company, was one of the first 12 industrial companies in the Dow Jones Industrial Average. Spire operates through two segments: Gas Utility and Gas Marketing. The Gas Utility segment includes the regulated businesses of Algasco, Laclede Gas, Missouri Gas Energy, Mobile Gas, and Willmut Gas. Spire services about 1.7 million customers in Alabama, Mississippi, and Missouri. It is now the 5thlargest natural gas utility. The Gas Marketing segment includes the unregulated businesses of Spire Marketing, Spire STL Pipeline, and Spire Storage. Total revenues were $2,236 million in fiscal 2021 (ends September 30)…
Please read the complete article at my profile on Seeking Alpha for Spire Stock: 3 Reasons to Buy Now.
Disclosure: Long SR
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Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.