Updated on March 3rd, 2025 by Felix Martinez
The Dividend Aristocrats are a group of stocks in the S&P 500 Index with 25+ years of consecutive dividend increases. These companies have high-quality business models that have stood the test of time and shown a remarkable ability to raise dividends every year regardless of the economy.
We have compiled a list of all 69 Dividend Aristocrats, along with relevant financial metrics like dividend yield and P/E ratios. You can download the full Dividend Aristocrats list by clicking on the link below:
Disclaimer: Sure Dividend is not affiliated with S&P Global in any way. S&P Global owns and maintains The Dividend Aristocrats Index. The information in this article and downloadable spreadsheet is based on Sure Dividend’s own review, summary, and analysis of the S&P 500 Dividend Aristocrats ETF (NOBL) and other sources, and is meant to help individual investors better understand this ETF and the index upon which it is based. None of the information in this article or spreadsheet is official data from S&P Global. Consult S&P Global for official information.
The list of Dividend Aristocrats is diversified across multiple sectors, including consumer goods, financials, industrials, and healthcare. Surprisingly, the utility sector is underrepresented.
Only three utility stocks are on the list of Dividend Aristocrats: Consolidated Edison (ED), NextEra Energy (NEE), and Atmos Energy (ATO).
Only three utilities are on the list, which may come as a surprise, especially since utilities are widely regarded as steady dividend stocks. This article will discuss Atmos Energy’s path to becoming a Dividend Aristocrat.
Business Overview
Atmos Energy was formed in 1906 in Texas. Since then, it has grown organically and through mergers. Today, Atmos Energy distributes and stores natural gas in eight states, serving over 3 million customers.
In addition, Atmos owns about 5,700 miles of natural gas transmission lines. The utility should generate about $4.8 billion in revenue last year. The company serves over 3 million natural gas customers in eight states.
Source: Investor Presentation
Atmos posted first quarter earnings on February 5th, 2025. The company reported reported fiscal 2025 Q1 earnings of $2.23 per diluted share, with a net income of $351.9 million. Capital expenditures reached $891.2 million, with 86% dedicated to safety and reliability. The company maintains strong financials, with 60.3% equity capitalization and $5.2 billion in liquidity, alongside $150.5 million in annualized regulatory outcomes.
The company reaffirmed its fiscal 2025 earnings guidance of $7.05–$7.25 per diluted share and expects $3.7 billion in capital expenditures. The Board declared a quarterly dividend of $0.87 per share, raising the annual dividend to $3.48, an 8.1% increase from 2024.
CEO Kevin Akers highlighted the company’s ongoing commitment to safety, reliability, and modernization, crediting its 5,300 employees for delivering strong results that benefit customers and communities.
Growth Prospects
Earnings growth across the utility industry typically mimics GDP growth, plus a couple of percentage points. However, we expect Atmos Energy to continue outperforming this trend due to its focus on capital investment in its regulated operations, a constructive regulatory environment in Texas, and population growth.
As a result, the company should benefit from strong rate base growth, which will generate annual earnings per share growth in accordance with management’s 6%—8% guidance.
New customers, rate increases, and aggressive capital expenditures are Atmos Energy’s growth drivers. One benefit of operating in a regulated industry is that utilities are permitted to raise rates on a regular basis, which virtually assures a steady level of growth.
Source: Investor Presentation
The company’s primary risk is its ability to achieve timely and positive regulatory rate adjustments. If it achieves lower than expected allowed returns, this could significantly harm profits.
However, we believe Atmos can achieve at least 7% annual EPS growth through continued improvements in gross margin, reductions in operating costs as a percentage of revenue, and top-line growth via acquisitions and organic customer growth.
The company continues to file favorable rate cases with its various localities, which also provide for small revenue increases over time, as we saw again in fiscal 2024 full–year results.
Competitive Advantages & Recession Performance
Atmos Energy’s main competitive advantage is the utility industry’s high regulatory hurdles. Gas service is necessary and vital to society. As a result, the industry is highly regulated, making it virtually impossible for a new competitor to enter the market. This provides great certainty to Atmos Energy and its annual earnings.
Another competitive advantage is the company’s stable business model and sound balance sheet, giving it an attractive cost of capital. This enables it to fund accretive acquisitions and growth capital expenditures, driving outsized earnings per share growth.
In addition, the utility business model is highly recession-resistant. While many companies experienced large earnings declines in 2008 and 2009, Atmos Energy’s earnings per share kept growing. Earnings-per-share during the Great Recession are shown below:
- 2007 earnings-per-share of $1.91
- 2008 earnings-per-share of $1.99 (4% growth)
- 2009 earnings-per-share of $2.07 (4% growth)
- 2010 earnings-per-share of $2.20 (6% growth)
The company still generated healthy growth even during the worst of the economic downturn. Results remained resilient and continued to grow during the pandemic, demonstrating Atmos’ assets’ mission-critical nature.
This resilience has allowed Atmos Energy to continue increasing its dividend each year during these unfavorable market environments.
Valuation & Expected Returns
Atmos Energy is expected to earn $7.20 this year. Based on this, the stock trades with a price-to-earnings ratio of 21.3x. This is above our fair value estimate of 19x earnings, and above the 10-year average price-to-earnings ratio for the stock.
As a result, Atmos Energy shares appear to be overvalued. If the stock valuation compresses from 21.3 to 19 over the next five years, the corresponding multiple compression would decrease annual returns by 1.6%. This could be a slight headwind for future returns.
Fortunately, the stock could still provide positive returns to shareholders, through earnings growth and dividends. We expect the company to grow earnings by 7% per year over the next five years.
In addition, the stock has a current dividend yield of 2.3%. ATO has increased its dividend for 41 consecutive years.
Putting it all together, Atmos Energy’s total expected returns could look like the following:
- 7% earnings growth
- 1.6% P/E multiple compression
- 2.3% dividend yield
Added up, Atmos Energy is expected to generate 7.7% annualized total returns over the next five years, which does not make the stock attractive for investors interested in dividend growth and total returns.
The dividend yield is not substantial but remains attractive, while the dividend appears relatively safe. The company has projected a 2025 payout ratio of ~48%, indicating a sustainable dividend. As a result, we view Atmos Energy as a blue-chip stock.
Final Thoughts
Atmos Energy stock is attractive for investors looking for an above-average yield and regular dividend growth. Because of this, it can serve a valuable purpose in an income investor’s portfolio. The stock offers a very secure and growing dividend income stream, and its dividend yield is well above the average dividend yield of the S&P 500 Index.
Note: Atmos Energy also ranks well using The Chowder Rule.
Atmos Energy is also a Dividend Aristocrat and should raise its dividend each year. With five-year expected returns of 11% per year, ATO stock is a buy.
Additionally, the following Sure Dividend databases contain the most reliable dividend growers in our investment universe:
- The Dividend Contenders List: 10-24 consecutive years of dividend increases.
- The Dividend Challengers List: 5-9 consecutive years of dividend increases.
- The Dividend Champions: Dividend stocks with 25+ years of dividend increases, including those that may not qualify as Dividend Aristocrats.
- The Dividend Achievers: dividend stocks with 10+ years of consecutive dividend increases.
- The Dividend Kings: considered to be the ultimate dividend growth stocks, the Dividend Kings list is comprised of stocks with 50+ years of consecutive dividend increases
If you’re looking for stocks with unique dividend characteristics, consider the following Sure Dividend databases:
- The Complete List of Monthly Dividend Stocks: stocks that pay dividends each month, for 12 payments over the year.
- The Blue Chip Stocks List: this database contains stocks that qualify as either Dividend Achievers, Dividend Aristocrats, or Dividend Kings.
The major domestic stock market indices are another solid resource for finding investment ideas. Sure Dividend compiles the following stock market databases and updates them monthly: