Dividend Growth Stock Overview: MDU Resources Group, Inc.

Knife River is MDU Resources Group's subsidiary responsible for manufacturing construction
materials like concrete and asphalt.
Photo courtesy "born1945"/flickr.com.

About MDU Resources Group

Diversified energy company MDU Resources Group whose subsidiaries produce, store and transport natural gas, and provide natural gas and electrical service to customers in Montana, North & South Dakota and Wyoming. The company also has subsidiaries that explore for natural gas and oil and that produce, market and sell construction materials. MDU is headquartered in Bismark, North Dakota and employs nearly 8,500 people.

The company has several business segments. The Distribution segment is the responsibility of Montana-Dakota Utilities Company, MDU’s public utility division. This segment provides regulated natural gas and electrical service to more than 138,000 residential, commercial, industrial and municipal customers in 177 communities.

MDU subsidiary WBI Energy runs the Pipeline and Energy Services segment. The segment’s facilities include 3,800 miles of natural gas lines and 3 underground natural gas storage facilities. And while most of the segment’s operations are regulated, the non-regulated operations include a 50% interest in natural gas processing facilities, oil & gas pipelines and an oil storage terminal in western North Dakota.

The Exploration and Production segment has proven reserves of 91,940 MBOE (thousands of barrels of oil equivalent). About 84% of the reserves are located in the Rocky Mountain region, while the remaining 16% are located in Texas and Louisiana.

Subsidiary Knife River mines, processes and sells construction aggregates, including asphalt mix and ready-mixed concrete, through the Construction Materials and Contracting segment. Finally, the Construction Services segment – run by subsidiary MDU Construction Services – is responsible for construction and maintenance of electric, gas and communication lines.

In 2014, MDU Resources had operating revenues of $4.67 billion, which was up nearly 5% over 2013. Earnings per share were up 4.1% to $1.53, giving the company a payout ratio of 47%. The company’s book value was $16.66 at the end of the year, up 11.0% over the value at the end of 2013. The growth from 2013 to 2014 was due to increases in transportation rates and higher electric sales volume due to customer growth.

Going forward, MDU is expecting that its rate base will grow by about 11% a year for the next 5 years. According to MDU’s annual SEC filing, the company seeks to grow EPS by 7 – 10% a year.

The company is a member of the S&P Mid Cap 400 index and S&P’s High Yield Dividend Aristocrats index, and trades under the ticker symbol MDU.

MDU Resources’ Dividend and Stock Split History

MDU Resources Dividend Growth

MDU Resources Group has compounded dividends at 4.4% annually over the last decade.

MDU Resources has increased its dividend payout each year since 1991. Since 2006, MDU has increased its dividend in the fourth quarter, announcing the increase in mid-November and having the stock go ex-dividend on or about December 9th. In 2014, MDU Resources announced a 2.8% increase in the quarterly dividend to an annual rate of 73 cents a share. I expect MDU Resources to announce its 25th annual dividend increase in November 2015.

The increase at the end of 2014 was on par for dividend increases in recent years. Since 2009, MDU has not increased dividends by more than 4%. Longer term, most of the company’s increases have been in the mid-single digit range. MDU Resource’s 5-year compounded annual dividend growth rate (CADGR) is 2.81%; its 10-year, 20-year and 25-year CADGRs are 4.36%, 4.23% and 3.81%, respectively.

Since beginning its record of annual dividend growth in 1991, MDU Resources stock has split 3-for-2 four times: in October 1995, July 1998, October 2003 and July 2006. A single share purchased before October 1995 would have split into 5.06 shares. Prior to 1991, MDU Resources split its stock 2-for-1 twice – in January 1978 and July 1986.

MDU Resources’ Direct Purchase and Dividend Reinvestment Plans

MDU Resources Group has both direct purchase and dividend reinvestment plans. You do not need to be a current shareholder to participate in the direct purchase plan, but your initial investment must be a single purchase of at least $250 or 10 monthly purchases of at least $25. There are no fees associated with direct or dividend reinvestment purchases under either plan.

When you go to sell your shares, you’ll pay a commission of 12 cents per share plus a transaction fee of between $15 and $30, depending on the type of sell order you request. You will also pay $5 to have the sales proceeds electronically deposited to your account.

Helpful Links

MDU Resources Group’s Investor Relations Website

Current quote and financial summary for MDU Resources Group (finviz.com)

Information on the direct purchase and dividend reinvestment plans for MDU Resources Group

 

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