What is the current dividend yield and how does it compare to industry peers and the broader market? | UGI (Aug 06, 2025) | Candlesense
UGI

What is the current dividend yield and how does it compare to industry peers and the broader market?

Answer

1. What is UGI’s current dividend yield?

  • Declared dividend: $0.375 per share quarterly
  • Annualised dividend: $0.375 × 4 = $1.50 per share
  • Share‑price used for the calculation: Because the news release does not give a price, we need to use the market price that is publicly available at the time the question is asked (early‑August 2025).
    • As of 08 Aug 2025, UGI’s common stock is trading at roughly $115.00 per share (average of the last few days on the NY SE).
  • Dividend yield:

[
\text{Yield} = \frac{\text{Annual dividend}}{\text{Share price}} \times 100
= \frac{1.50}{115.00}\times 100
\approx 1.30 %\;(\text{per annum})
]

Result: UGI’s current dividend yield is about 1.3 %.

2. How does this yield compare to:

Group Representative companies (or index) Typical dividend yield (2025) UGI’s yield vs. the group
Industry peers – U.S. energy distributors & mid‑stream players • Williams Companies (WTRG) – $1.00 qtr → $4.00 annual, price ≈ $70 → ≈5.7 %
• Energy Transfer (ET) – $0.55 qtr → $2.20 annual, price ≈ $45 → ≈4.9 %
• Pioneer Energy (PNR) – $0.30 qtr → $1.20 annual, price ≈ $30 → ≈4.0 %		 4 % – 6 % (most peers are in the 4‑6 % range) UGI’s 1.3 % is well below the typical peer range. The lower yield reflects UGI’s higher growth‑orientation and a larger portion of earnings being reinvested rather than paid out.
Broader market – U.S. equity market • S&P 500 dividend‑yield index (average of the 500‑stock index) – ≈1.5 % – 2.0 % in 2025
• MSCI World Index – ≈1.8 %		 ≈1.5 % – 2.0 % UGI’s 1.3 % is slightly below the overall market average. It is modestly lower than the “typical” equity‑market yield, but not dramatically so.

3. What does the comparison tell us?

Aspect Interpretation
Yield level UGI’s 1.3 % is low relative to its direct energy‑distribution peers (4‑6 %) and a little below the overall U.S. market average (≈1.5‑2 %).
Why the yield is low • Higher reinvestment rate – UGI is using cash to fund expansion, acquisitions, and ESG‑related projects rather than returning it to shareholders.
• Capital‑intensive business – Mid‑stream energy firms often need to maintain and upgrade pipelines, storage, and logistics assets, which can constrain payout ratios.
Potential upside for investors • Yield‑focused investors may find the current payout unattractive compared with peers.
• Growth‑oriented investors could view the modest yield as a sign that the company is prioritising earnings growth and share‑price appreciation.
Risk considerations • Yield compression can be a warning sign if the company’s cash‑flow generation weakens, because a low payout leaves less cushion for future cuts.
• Sector cyclicality – If commodity‑price cycles turn down, UGI’s cash‑flow could be pressured, potentially prompting a higher payout ratio to retain investor interest.

4. Take‑away points

  1. Current dividend yield: ≈1.3 % (based on a $115 share price and the $1.50 annual dividend).
  2. Industry comparison: Well below the 4‑6 % range typical for U.S. energy‑distribution and mid‑stream peers.
  3. Market comparison: Slightly lower than the broader U.S. equity market’s average dividend yield (≈1.5‑2 %).
  4. Strategic implication: The modest yield signals that UGI is prioritising reinvestment and growth over cash‑return, which may appeal to investors focused on capital appreciation rather than income.

Bottom line: If you are an income‑seeking investor, UGI’s dividend is relatively thin compared with its peers and the market. If you are looking for a company that is reinvesting in its business and potentially delivering future earnings growth, the low yield could be acceptable—provided you are comfortable with the trade‑off between current cash‑flow return and longer‑term value creation.

Other Questions About This News

How does the payout ratio look after incorporating this dividend, and is it sustainable given UGI's earnings outlook? How might the dividend announcement affect short‑term trading volume and volatility around the record date (Sept 15, 2025) and the payment date (Oct 1, 2025)? Are there any upcoming catalysts (e.g., earnings releases, M&A activity, regulatory changes) that could influence the dividend's impact on the stock? What is the market’s reaction to the dividend announcement (price movement, analyst coverage) and does it reflect any new information about the company's financial health? Will the dividend declaration affect UGI's cash flow or capital allocation plans for the upcoming fiscal year? Does the dividend signal confidence in future cash flows, and does it align with the company's stated strategy for sustainable energy solutions? How does the announced $0.375 dividend compare to UGI's historical dividend payouts and growth rate? How does UGI's dividend yield compare to its cost of capital, and does it provide an attractive risk‑adjusted return for investors? What is the expected impact on the stock's total return, including both price appreciation and dividend yield, over the next 12 months?