Utility Gas Inflation Is Soaring. This Stock Is a Clear Winner

Key Points

• Last month’s Consumer Price Index report showed inflation for piped utility has increased 10.8% year-over-year.
• That bodes well for Atmos Energy, the largest natural-gas-only utility in the United States.
• Over the past year, the stock’s 17% gain has outperformed the S&P 500 while its dividend is on the verge of joining an exclusive club.

On Jan. 13, the U.S. Bureau of Labor Statistics released December’s Consumer Price Index data, showing that headline inflation rose at a year-over-year (YOY) pace of 2.7%. 

While there were some bright spots, including deflation of -3.4% for gasoline, other figures stood out like a sore thumb. That was exactly the case for piped utility gas services, which saw a staggering 10.8% YOY increase. 

That isn’t great news for Americans’ already elevated utility bills, especially as the thick of winter arrives, and home heating needs increase. But it could be good news for shareholders of the largest natural gas-only utility in the United States. 

Why Utility Gas Prices Are Surging

While 10.8% YOY inflation is not ideal, it is not an issue being faced by Americans alone. Globally, utility gas prices are skyrocketing due to surging demand, especially for liquified natural gas (LNG). 

Despite the U.S. benchmark providing some relief so far this year (-2.94%), the European and United Kingdom’s benchmarks have continued to rise to the tune of 25% and 26% respectively. More recently, U.S. LNG futures have surged 17% since Jan. 16 amid an ongoing Arctic blast that has kept much of the mainland United States under freezing conditions.  

Rising prices have been exacerbated by limited domestic supply failing to keep pace with demand, higher production costs, and the United States shipping more of its domestically produced LNG overseas. On Jan. 2, Reuters reported that in 2025, the United States became the first country to ever export more than 100 million metric tons of LNG. 

Then, of course, there is AI data center-driven demand, which relies on LNG—among other energy inputs—for both power generation and cooling. According to Natural Gas Intelligence, data centers currently consume more than 1 billion cubic feet per day (Bcf/d) of natural gas. By 2030, forecasts have that consumption increasing to between 4 ​​Bcf/d and 8 Bcf/d.

All in all, that should continue to benefit investors who have recognized that supply-demand gap and identified the companies likely to profit from inflated prices. 

A 120-Year-Old Utility Company That Packs a Growth Punch

Founded in 1906 as the Amarillo Gas Company, Atmos Energy NYSE: ATO—now headquartered in Dallas—delivers natural gas to over 3.3 million residential, commercial, and industrial customers across nine states through a vast pipeline network for heating, cooking, and industrial processes. 

The utility serves about 1,400 communities from the Blue Ridge Mountains to the Rocky Mountains, with core services that include gas delivery, system integrity and maintenance, storage and transmission connections, and customer programs such as billing, conservation, and energy-efficiency offerings.

Over its past fiscal year, Atmos Energy has seen its earnings per share (EPS) grow by more than 9.22%, its revenue grow by nearly 13%, and its net income grow by nearly 15%. 

That has contributed to ATO's financial health, landing its stock price firmly in the Green Zone, according to TradeSmith, for over 12 months, while the stock has gained more than 17% during that period and more than 47% since the start of 2025. 

Meanwhile, it continues to reward shareholders decade after decade with its dividend.

A Dividend Aristocrat With a 41-Year Track Record 

As a utility stock, Atmos Energy defies certain preconceived notions. Companies belonging to that sector are often considered defensive investments with slow share appreciation and dividends that pay a better-than-average yield.

For Atmos Energy, only half of that is true. With its one-year gain outpacing the S&P 500’s gain of around 14%, the utility company has behaved more like a growth stock. 

But when it comes to the sector’s reputation for income, it delivers there, too. The Dividend Aristocrat yields 2.35%—or $4 per share annually—and has increased its payout for 41 consecutive years. 

Meanwhile, ATO’s annualized five-year dividend growth rate is 8.63%, and the company’s dividend payout ratio of just over 53% is considered both healthy and sustainable. 

What Wall Street Thinks About Atmos Energy  

Based on 14 analysts covering the stock, Atmos Energy receives a consensus Hold rating, with three analysts assigning it a Buy rating, 11 assigning it a Hold, and none assigning it a Sell. 

While the average 12-month price target for ATO represents just 1.67% potential upside, Atmos Energy’s trailing EPS of $7.49 and price-to-earnings (P/E) ratio of 22.75 suggest that the company’s earnings should grow 7.66% next year, from $7.18 to $7.73 per share.

Notably, institutional ownership stands at a higher-than-average 90.17%, with inflows of $4.62 billion easily outpacing outflows of $2.82 billion. Current short interest of 3.19% of the float suggests that Wall Street’s bears are disinterested in betting against the natural gas utility giant. 

Atmos Energy scores higher than 88% of the companies evaluated by MarketBeat, and ranks 26th out of 89 stocks in the utilities sector.