The Edge

2 Low Volatility Growth and Income Stocks

Not all investors head to the plate looking to hit a home run on every pitch. Some are interested in low volatility companies with growth prospects that pay a decent dividend. We’ve identified two stocks with a two-year beta under one, which means they have been less volatile than the S&P 500 during the last 24-months.

Each of the stocks offers shareholders a dividend yield of at least 2.5%. To maintain and possibly increase their payouts, both have no more than 51.03% debt to total capitalization and a return on equity (ROE) of more than 12%. Meanwhile, the duo is expected to increase their sales and profits by at least 5% for this year and next.

National Fuel Gas Company (NFG)

Dividend Yield: 3.58%
ROE: 12.86%
Debt/Total Cap: 51.03%
Two-year Beta: 0.71

NFG has paid a dividend for 118 consecutive years and has increased its dividend for the past 50 consecutive years. (1)

National Fuel Gas Company is a diversified energy company headquartered in Williamsville, New York, that operates an integrated collection of natural gas and oil assets across four business segments: Exploration & Production, Pipeline & Storage, Gathering, and Utility.

The Exploration and Production segment explores for, develops, and produces natural gas and oil in California and in the Appalachian region of the United States. The Pipeline and Storage segment provides interstate natural gas transportation and storage services through an integrated gas pipeline systems in Pennsylvania and New York; and owns and operates 31 underground natural gas storage fields. The Gathering segment builds, owns, and operates natural gas processing and pipeline gathering facilities in the Appalachian region, as well as provides gathering services to Seneca Resources Company, LLC. The Utility segment sells natural gas or provides natural gas transportation services to approximately 747,000 customers in Buffalo, Niagara Falls, and Jamestown, New York; and Erie and Sharon, Pennsylvania. The company markets gas to industrial, wholesale, commercial, public authority, and residential customers primarily in western and central New York, and northwestern Pennsylvania.

National Fuel Gas Company (NFG)

Dividend Yield: 2.4%
ROE: 14.15%
Debt/Total Cap: 12.47%
Two-year Beta: 0.99

The software company has delivered impressive sales and profit growth.

Sales: 14% average revenue CAGR 2012-2020, from $126 million in 2012 to $371 million in 2020

Operating Profit Growth: Average Non-GAAP operating profit CAGR of 14% from 2012 to 2020, with $54 million EBITDA for 2020. Operating margins ranged between 14%-16% from 2012 through 2020. (2)

Magic Software Enterprises Ltd. provides proprietary application development, business process integration, vertical software solutions, and information technologies (IT) outsourcing software services in Israel and internationally. The company’s Software Services segment develops, markets, sells, and supports application platform, software applications, and business and process integration solutions and related services. Its IT Professional Services segment offers IT services in the areas of infrastructure design and delivery, application development, technology planning and implementation services, communications services and solutions, and supplemental outsourcing services.

1 – https://s1.q4cdn.com/329525430/files/doc_financials/2021/q1/20210204-NFG-Q1FY21-Investor-Presentation-FINAL_.pdf

2 – https://www.magicsoftware.com/wp-content/uploads/2021/03/Magic-Overview-March-2021.pdf