South Jersey Industries (SJI) 2012 Review

South Jersey Industries (SJI) is a holding company with subsidiaries in natural gas distribution in southern New Jersey and drilling and gathering of natural gas.  The company has grown profits and dividends at 7-10% pace over the last ten years earning an 11-15% return on equity.  It should continue to increase profitability as well as an enhanced rate of dividend growth as a result of:

(1) recent increase in its base rates,

(2) a rise in the number of profitable projects in its nonutility operations,

(3) growth in its customer base [in particular from the growth in the Atlantic City area] plus an increase in customers converting form other fuels to natural gas,

(4) a rationalization of its operations to focus on higher profit investments and lower costs.

Negatives:

(1)   declining revenue from its nonutility operations,

(2) difficulties in its wholesale energy division.

SJI is rated B++ by Value Line, has a debt to equity ratio of 41% and its stock yield 3.3%

Statistical Summary

                 Stock      Dividend         Payout      # Increases  

                Yield      Growth Rate     Ratio       Since 2002

SJI              3.3%           9%              54%             10

Ind Ave       4.1              3                 66                NA 

                 Debt/                        EPS Down       Net        Value Line

                 Equity         ROE      Since 2002      Margin       Rating

SJI             41%            13%            1                 12%            B++

Ind Ave      92               14              NA                7               NA

     Chart

            Note: SJI stock made good progress off its October 2008 low, quickly surpassing the downtrend off of its May 2007 high (red line) and the November trading high (green line).  Long term the stock is in a trading range (straight blue lines).  Intermediate term, it is also in a trading range (the purple line is the lower boundary; the top straight blue line is the upper boundary).  The wiggly blue line is on balance volume.  The dividend Growth Portfolio owns a full position in SJI.  The upper boundary of its Buy Value Range is $32; the lower boundary of its Sell Half Range is $66.

http://finance.yahoo.com/q?s=SJI

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