ONE Gas: Delivering Long-Term Wealth To Investors – Seeking Alpha

Now we’re cooking with gas!

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Followers of my writing on the cannabis sector might be surprised by the subject of this article, which is about as far from cannabis as you can get. However, there is a place for companies like ONE Gas (OGS) in almost every portfolio. Creating wealth in the long term is what investing is all about, and ONE Gas is a company built to do just that. It won’t make you rich next month or next year, but in the long term it’s as much of a high probability wealth builder as you will find in the investing universe. This article reviews the company’s strengths, assess the latest earnings report, and recommend investment strategies.

Since I first wrote about ONE Gas last December, the stock has done quite well, with a total return of 21.11% vs. a decline of 9.39 in the S&P500:

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After the Q4 earnings report it’s time to review the investment case and look at why OGS is getting so much love from investors.

ONE Gas: The Company

ONE Gas is a local distribution company [LDC] in the business of selling and distributing natural gas in specific geographic areas. It was founded in 2014 when ONEOK (OKE) divested its local gas distribution operations to become strictly a gas producer. It serves 2.2 million customers in Texas, Oklahoma, and Kansas. LDCs are similar to electric utilities in that they provide energy in a regulated environment.

Since its inception in 2014 ONE Gas has had a remarkably consistent history of growth in revenue, earnings, and dividends:



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2014 2015 2016 2017 2018 2019 2020 2021
EPS $2.07 $2.24 $2.65 $3.08 $3.25 $3.51 $3.68 $3.85
Shares (millions) 52.4 52.6 52.5 52.5 52.7 52.9 53.1 53.5
Div/share $0.84 $1.20 $1.40 $1.68 $1.84 $2.00 $2.16 $2.28
Div increase 42.86% 16.67% 20.00% 9.52% 8.70% 8.00% 5.56%
Payout ratio 40.58% 53.57% 52.83% 54.55% 56.62% 56.98% 58.70% 59.22%
EOY PE ratio 21 22 24 24 24 26 21 18