Tuesday, October 14, 2014

Southern Jersey Industries (SJI) 2014 Review

South Jersey Industries (SJI) is a holding company with subsidiaries in natural gas distribution in southern New Jersey and drilling and gathering of natural gas.  The company has grown profits and dividends at 8-9% pace over the last ten years earning a 12-15% return on equity.  It should continue to increase profitability as well as an enhanced rate of dividend growth as a result of:

(1) a rise in the number of profitable projects in its nonutility operations,

(2) growth in its customer base [in particular from the growth in the Atlantic City area] plus an increase in customers converting form other fuels to natural gas,

(3) a rationalization of its operations to focus on higher profit investments and lower costs.

Negatives:

(1) difficulties in its wholesale energy division.

SJI is rated A by Value Line, has a debt to equity ratio of 44% and its stock yield 3.5%

Statistical Summary

                 Stock      Dividend         Payout      # Increases  
                Yield      Growth Rate     Ratio       Since 2004

SJI              3.5%           8%              58%             10
Ind Ave       3.6              4                 58                NA 

                 Debt/                        EPS Down       Net        Value Line
                 Equity         ROE      Since 2004      Margin       Rating

SJI             44%            12%            1                 13%             A
Ind Ave      45               11              NA                7               NA

       Chart

            Note: SJI stock made great progress off its October 2008 low, quickly surpassing the downtrend off its May 2007 high (straight red line) and the November 2008 trading high (green line).  The stock is in trading ranges for both the long term (blue lines) and intermediate term (purple lines).  The Dividend Growth Portfolio owns a full position in SJI.  It is currently on the Dividend Growth Buy List.  The lower boundary of its Sell Half Range is $80.


   

10/14

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