MDU Resources Group Inc (MDU): Get to Know this Rock Solid, Diversified Utility Company

Page 1 of 2

Utility companies are sometimes thought of as boring, steady income opportunities with limited capital gain potential. However, over my 11 years of investing I have found that well-managed utility companies can provide significant capital gains as well as a growing income stream, resulting in excellent returns for patient, long term investors. Today, I am going to highlight MDU Resources Group Inc (NYSE:MDU), which has been a rock solid performer for my portfolio that I can honestly say has been anything but boring.

MDU has over 8,000 employees and annual revenues of over $4 billion. MDU’s dividend history consists of 74 years of uninterrupted dividend payments and 22 years of consecutive dividend increases. MDU’s current dividend yield is 2.9% and the dividend has averaged a 5% increase over the last decade. MDU’s dividend growth is lower than I typically prefer, but their current capital gain potential more than makes up for this. MDU Resources Group Inc (NYSE:MDU) is much more than a utility company and has a diverse mix of businesses. The following is a brief description of MDU’s business segments:

Regulated Operations

MDU’s regulated business segment includes electric utility operations, natural gas utility operations, and pipeline and energy services. MDU distributes electricity in Montana, North Dakota, South Dakota and Wyoming, and owns or has interests in eleven electric generating facilities, including two wind farms. MDU Resources Group Inc (NYSE:MDU) distributes natural gas in Montana, North Dakota, South Dakota, Wyoming, Oregon, Idaho, and Minnesota. MDU’s 2007 acquisition of Cascade Natural Gas Corporation and 2008 acquisition of Intermountain Gas Company tripled it’s natural gas distribution customer base.

Exploration and Production

Fidelity Exploration and Production Company, a subsidiary of MDU, is involved in the acquisition, exploration, development, and production of oil and natural gas. Fidelity operates in Texas, Louisiana, Oklahoma, New Mexico, Colorodo, Utah, North Dakota, and Wyoming. This segment represents MDU’s growth engine in upcoming years.

Construction

Knife River Corporation, a subsidiary of MDU, mines and sells a wide variety of construction materials including crushed stone, sand, gravel, ready-mix concrete, cement, and asphalt. MDU has significantly expanded their construction materials business by completing a very large number of successful acquisitions. Knife River operates in the central, southern, and western portions of the U.S.

MDU’s Construction Services unit consists of the construction and maintenance of electrical systems, traffic and communications systems, gas pipelines, and mechanical systems. These services are available for a wide variety of commercial and industrial applications. This unit also includes businesses that are involved in equipment rental and sales, and electrical wholesale and distribution.

Competition

Cemex SAB de CV (ADR) (NYSE:CX) is based in Mexico with operations in over 50 countries and annual sales of over $15 billion. Cemex is a manufacturer of a wide variety of construction products, such as concrete, aggregates, asphalt, and precast products such as culverts and concrete blocks. Some of CX’s products compete directly with MDU’s Knife River subsidiary in the U.S. The great recession, the decline in housing, and a large acquisition at the wrong time caused CX’s sales, earnings, and stock price to tumble. 

However, the housing market is slowly starting to show signs of life, and this is indicated in CX’s annual sales, which have increased for two consecutive years. The share price has shown signs of recovery as well, even as CX has not made it back to profitability. CX’s share price has climbed back from a low of below $3 per share to the recent closing price of $11 per share, but is still well below it’s high of over $30. Cemex has a global footprint with products that will be in high demand with a booming global economy. Unfortunately, the global economy has a long way to go in its recovery efforts, and as a result I consider CX to be a speculative stock with potentially high rewards.

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!