ATO - Atmos Energy: Buy This Dividend Aristocrat Now For Compounding Income

2024-06-07 08:00:00 ET

Summary

• Atmos Energy is a first-rate example of what owning an exceptional compounder can do for a portfolio.
• The demographics of its service areas are resulting in customer growth, which is helping to drive overall growth for the gas utility.
• ATO's interest coverage ratio was very high through the first half of fiscal year 2024.
• Shares of the regulated gas utility are priced 8% below my fair value estimate.
• ATO appears to be realistically set up for at least 10% annual total returns through fiscal year 2026.

There is much that can be said about the power of compounding. Depending on what side of the ledger somebody is on financially, it can either be their greatest friend or their worst enemy.

My favorite quote that applies to compound interest is most often attributed to Albert Einstein. Whether he said it or not is a subject of debate. Regardless, it doesn't take away from the validity of the statement:

Compound interest is the eighth wonder of the world. He who understands it earns it. He who doesn't pay it. Albert Einstein (maybe)...

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