Dividend Growth Stock Overview: South Jersey Industries

South Jersey Industries serves 7 counties in southern New Jersey, including
Atlantic City.
Photo: Freeimages.com/Mark Jones

About South Jersey Industries

South Jersey Industries is a holding company for several energy subsidiaries, the main one of which is South Jersey Gas Company, which distributes natural gas in the 7 southernmost counties in New Jersey. Other company subsidiaries are responsible for maintaining midstream assets, exploration of new energy sources, providing energy-related services to consumers, and marketing natural gas to new customers. South Jersey Industries was founded in 1969 and is headquartered in Folsom, New Jersey.

As the main subsidiary of South Jersey Industries, South Jersey Gas Company contributes the majority of the company’s income. South Jersey Gas is a regulated natural gas utility that serves nearly 370,000 customers across 2,500 square miles in southern New Jersey, including Atlantic City. About 40% of South Jersey Gas’ customers are residential, with the remaining 60% divided between commercial, industrial and energy generation companies.

South Jersey Industries’ primary assets are the over 6,300 miles of gas distribution mains and 122 miles of gas transmission mains, along with 154 acres of land in Folsom, New Jersey.

Other companies under the South Jersey Industries umbrella are South Jersey Energy Company, which acquires and markets natural gas and electricity to retail users; South Jersey Resources Group, which markets natural gas storage, commodity and transportation assets in states across Appalachia, the mid-Atlantic and the south (including to South Jersey Energy); South Jersey Exploration, which owns oil, gas and mineral rights in the Marcellus Shale region of Pennsylvania; SJI Midstream, which was formed in 2014 to invest in a 100 mile natural gas pipeline in New Jersey and Pennsylvania; South Jersey Energy Service Plus, which energy, HVAC and plumbing services to retail customers; and Marina Energy, which develops and operates on-site energy projects.

South Jersey Industries has stated that one of the corporate goals is to increase its earnings per share by 6 – 7% annually, which will support desired average dividend increases of 6 – 7% a year.

The company is a member of the S&P Small Cap 600 and Russell 2000 indices and trades under the ticker symbol SJI.

South Jersey Industries’ Dividend and Stock Split History

South Jersey Industries Dividend Growth

Since beginning its year-over-year dividend growth in 2000, South Jersey Industries has compounded its dividend at over 7% a year.

South Jersey Industries has grown dividends year-over-year since 2000. Since 2007, the company has announced dividend increases at the end of November or beginning of December, with the stock going ex-dividend three weeks later. South Jersey’s most recent dividend increase (its 16th consecutive year of dividend growth) was in November 2015 when the company raised the dividend by 5.0% to an annualized $1.055.

For a utility, South Jersey has a good record of dividend increases. The company’s most recent dividend increase was it’s smallest since 2006. In general, the year-over-year increases have been in the 8 – 11% range, giving the company a 5-year dividend growth rate of 8.47% and a 10-year dividend growth rate of 8.50%. Since 2000, South Jersey has averaged a growth rate of 7.07%.

Over the last 3 decades, South Jersey Industries has split its stock 3 times, each time 2-for-1. These splits occurred in May 1987, July 2005 and, most recently in May 2015. A single share of South Jersey stock purchased prior to May 1987 would have split by now into 8 shares.

Over the 5 years ending on December 31, 2015, South Jersey Industries stock barely appreciated, with an annual growth rate of 1.25%, from a split-adjusted $22.10 to $23.52. This dramatically underperformed the 10.20% compounded return of the S&P 500 index, the 10.07% compounded return of the S&P Small Cap 600 index and the 7.71% compounded return of the Russell 2000 index over the same period.

South Jersey Industries’ Direct Purchase and Dividend Reinvestment Plans

South Jersey Industries has both direct purchase and dividend reinvestment plans. You don’t need to be a current shareholder to participate in the plans – you can make your initial purchase through the plan. The minimum investment for the initial direct purchase is $100 and $25 for follow-on direct purchases. The dividend reinvestment plan allows for full or partial reinvestment of dividends.

The plans are extremely favorable for investors. South Jersey Industries covers all the costs for purchases made through the plan – either directly or by dividend reinvestment. When selling stock in the plan, you will pay a transaction fee of $25 per sell order plus a commission of 10 cents per share. These are very common among dividend reinvestment plans and will be deducted from the sales proceeds.

The most unique feature of the plan and one that greatly benefits investors is the discount offered for shares purchased within the plan. On August 1, 2015, South Jersey Industries announced that shares purchased within the plan, would be purchased directly from the company and would be discounted by 2%. The company can revoke this discount or, alternatively, increase it up to a 5% discount at any time, so be sure to check the current discount when investing through the plans.

Helpful Links

South Jersey Industries’ Investor Relations Website

Current quote and financial summary for South Jersey Industries (finviz.com)

Information on the direct purchase and dividend reinvestment plans for South Jersey Industries

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