Why Southwest Gas Stock Deserves a Spot in Your Portfolio for Now

Southwest Gas SWX focuses on consistent investments to strengthen its infrastructure, which has played a critical role in expanding the company's operations. Southwest Gas is also gaining from consistent customer additions. Given its strong growth and better debt management, SWX makes for a solid investment option in the Zacks Utility Gas Distribution industry.

Let us focus on the reasons that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment.

SWX’s Growth Forecast & Surprise History

The Zacks Consensus Estimate for SWX’s 2025 earnings per share (EPS) has increased 5.1% to $3.72 in the past 60 days. 

The Zacks Consensus Estimate for 2026 sales is pegged at $5.13 billion, indicating year-over-year growth of 6%.

SWX’s long-term (three to five years) earnings growth rate is 9.9%. The company delivered an average earnings surprise of 6% in the past four quarters.

Overview of SWX’s Debt Profile

Currently, Southwest Gas’ total debt to capital is 57.36%, better than the sector’s average of 59.23%. A lower ratio suggests the company is less reliant on borrowed money, reducing the risk of defaulting on debt obligations and a stronger financial position.

SWX’s Strategic Capital Allocation Plan

Southwest Gas strategically prepares its investment to fulfill the growing demand for safe, dependable and cost-effective energy solutions. The company estimates a $4.3 billion capital investment between 2025 and 2029. The capital expenditure for 2025 is estimated to be $880 million, which will fund customer growth, system enhancements and pipe replacement initiatives.

SWX’s Steady Growth in Customer Base

The company's natural gas operations serve a diverse and increasing customer base across three states: Arizona, Nevada and California. Due to robust economic growth across its service areas, Southwest Gas installed 40,000 first-time meter sets in the 12 months ended March 31, 2025.

Southwest Gas estimates a 1.4% increase in customers every year through 2029. The company's performance will improve as its customer base continues to grow.

SWX’s Return to Shareholders

Southwest Gas has been increasing shareholder value by steadily paying dividends. Currently, the company’s quarterly dividend is 62 cents per share, resulting in an annualized dividend of $2.48. The company’s current dividend yield is 3.36%, better than the Zacks S&P 500 Composite's average of 1.25%.

During the first quarter of 2025, SWX paid $44.5 million in dividends compared to the year-ago figure of $44.4 million.

SWX Stock Outperforms Industry

In the past month, SWX shares have risen 4.3% compared with the industry’s growth of 1.4%.

Other Stocks to Consider

A few other top-ranked stocks from the same industry are UGI Corporation UGI, Atmos Energy Corp. ATO and ONE Gas, Inc. OGS, each holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

UGI’s long-term earnings growth rate is 5.2%. The Zacks Consensus Estimate for fiscal 2025 EPS is pegged at $3.13, which suggests a year-over-year rise of 2.3%.

ATO’s long-term earnings growth rate is 7.2%. The Zacks Consensus Estimate for fiscal 2025 EPS is pegged at $7.24, which implies a year-over-year jump of 6%.

OGS’ long-term earnings growth rate is 5.6%. The Zacks Consensus Estimate for 2025 EPS is pegged at $4.29, which calls for a year-over-year improvement of 9.7%.

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This article originally published on Zacks Investment Research (zacks.com).

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