National Fuel Gas Company’s (NFG) origin is among the oldest in the U.S. energy business, dating back to the early 1800s. The company’s precursor drilled the nation’s first natural gas well for commercial use in Fredonia, New York in 1825 to power the town’s street lights, only eight years after the nation’s first gas streetlights in Baltimore. The National Fuel of today was incorporated in 1902, representing the Buffalo, N.Y. and western Pennsylvania natural gas investments that were part of J.D. Rockefeller’s Standard Oil trust. While the trust was broken up in 1911, NFG has more recently sought to expand its business through the acquisition of CenterPoint Energy ‘s Ohio natural gas utility business for $2.5 billion, announced last October . This strategic move, set to close late this year, will double the company’s gas utility rate base and expand its customer base to approximately 1.1 million across New York, Pennsylvania and the newly entered Ohio market. The acquisition brings 335,000 customers, nearly 5,900 miles of pipeline infrastructure and annual natural gas consumption of 60 billion cubic feet. What makes this deal particularly attractive is the acquisition multiple of just 1.6 times the estimated 2026 rate base. Ohio offers National Fuel a supportive regulatory environment for natural gas operations, coupled with a cold-weather climate that ensures steady demand. The transaction is expected to close in the fourth quarter of 2026, pending regulatory approvals. Earnings growth NFG reported fourth-quarter fiscal 2025 adjusted earnings per share of $1.22, a 58% increase from 77 cents in the prior-year period. For the full fiscal year 2025, revenue reached $2.28 billion, up 17% from the previous year, while adjusted net income grew to $630.5 million. National is currently trading at 10-10.7x the company’s fiscal 2026 adjusted earnings guidance of $7.60 to $8.10 per share. A key advantage for National Fuel is the company’s vertically integrated structure. NFG’s unregulated upstream exploration and production business generates substantial free cash flow — approximately 68% of the company’s earnings before interest, taxes, depreciation and amortization. The company operates natural gas assets throughout the Appalachian Basin, one of North America’s most prolific gas-producing regions. That strategic positioning enables National Fuel to capitalize on growing demand for natural gas, particularly from emerging sectors such as data centers and liquid natural gas exports. Meanwhile, the regulated part of the business offers greater business stability . Income-focused investors should appreciate National Fuel’s commitment to shareholder returns. The company has had 55 consecutive years of dividend increases and 123 consecutive years of dividend payments. The current quarterly dividend of 53.5 cents per share yields approximately 2.6% annually. With a payout ratio supported by stable, regulated cash flows, the dividend appears sustainable and positioned for future growth. Beyond the Ohio acquisition, National Fuel is advancing several pipeline expansion projects, including the Tioga Pathway and Shippingport Lateral projects. The Shippingport Lateral alone is expected to generate approximately $15 million in annual revenue by providing firm transportation capacity to data center customers, highlighting NFG’s ability to capitalize on emerging demand trends. Buy-write strategy In addition to buying the stock, an investor interested in potentially enhancing income beyond dividends could consider a buy-write . That strategy involves buying the stock and writing upside calls against the position to supplement the dividend with some options premium. The challenge is that NFG options trade very infrequently, and the bid/ask spread is consequently quite wide, so to sell calls an investor needs to have a sense of what the price should be. The March 85 calls market was trading at $0.05 bid and $3.70 ask as of Friday’s close. Entering a market order to sell would likely result in a very bad “fill” — that is, an economically unattractive sale price. So limit orders MUST be used, but what price? The midpoint of $0.05 and $3.70 is $1.875. Because one cannot enter limits at fractions of a cent, one could use a limit price of $1.85, and a standstill yield of just over 2.2% of Friday’s closing price, or just over 13% annualized. An investor interested in using options in a situation like this should be patient when trying to sell covered calls, as it is better not to sell the calls at all than to sell them at a bad price … and a nickel for the March $85s, the bid price as of Friday’s close, is a very bad price indeed. DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
