As a long term investor, I like putting my money into companies that will be around for a long time and deliver steady, consistent returns. As a young investor, I tend to invest in companies with large growth opportunities, which translates to primarily tech stocks. Today, I wanted to examine a non-tech stock. In fact, it is probably in one of the least sexy areas you can invest in: infrastructure and energy storage. Here, I want to examine a stock I am considering adding to my portfolio.
MDU Resources is a company providing essential products such as sand and concrete to construction projects. They also provide energy development, storage, and transportation services. MDU operates in the western and upper Great Plains of the United States.
Why do I like MDU so much? First, the dividend is great. I am a strong believer in dividends as a component of shareholder returns, because they are tangible and not dependent on the sentiment of other investors.
For 82 years, MDU has been paying a dividend, and has increased it for the last 28. This represents dividend growth during very different economic circumstances. The current dividend yield is 2.68%, which is above my ideal target of 2.5.
Fourth quarter year over year growth of income was almost 25%, a net increase of over $18 million. This is great, as revenues went up about $30 million, showing the company is getting more efficient.
On the qualitative front, there is a lot to like about MDU. First, compared to my personal portfolio they are in a unique industry, and providing infrastructure services can provide a steady income stream. Further, if the economy slows, governments tend to look to infrastructure spending to spur the economy. MDU would get a lot of increased business even if the economy slows a little.
Overall, I like MDU and think I will invest in the company. It would be a great way to diversify, and get some more dividend income.
Note: I do not currently own MDU Resources stock, but I am considering buying it.
Disclaimer: This post if for entertainment purposes only. Do not consider this financial advice or recommendations. Consult a financial professional before making any investment decision.
Gen Z Finance 