Natural Gas in 2025: Powering Growth and Innovation

The Hennessy Gas Utility Fund is a convenient and simple way for investors to invest in the group of publicly traded members of the American Gas Association (AGA). The Fund’s Portfolio Managers attended the AGA Financial Forum recently to gain insight into trends affecting natural gas companies. The following highlights their takeaways from the Financial Forum.

June 2025
  • Ryan C. Kelley
    Ryan C. Kelley, CFA
    Chief Investment Officer and Portfolio Manager
  • L. Joshua Wein, CAIA
    L. Joshua Wein, CAIA
    Portfolio Manager

Key Takeaways

» Natural gas demand is surging, driven by demand for artificial intelligence (AI) powered data centers and the expected onshoring of U.S. manufacturing, as well as continued growth in the residential and commercial sectors.

» Utilities are accelerating capital investment and system modernization to meet customer growth and reliability needs.

» A constructive regulatory environment and disciplined capital allocation are supporting steady dividend growth and sector stability.

» U.S. Liquefied Natural Gas (LNG) export capacity is on track to more than double between 2024 and 2028, positioning the U.S. industry as a global energy leader.

The natural gas industry is experiencing a pronounced resurgence with natural gas a significant part of the clean energy future and a strategic economic asset to the U.S. The message from industry leaders at the AGA Financial Forum was clear: natural gas is “back in business.” This sentiment marks a significant shift from prior years, when the sector was grappling with an uncertain future and the possible relegation of natural gas’ role as a “transition fuel.”

Company presentations at the Forum highlighted robust customer growth and targeted investments in system modernization, safety enhancements, and service expansion. Management teams emphasized disciplined capital allocation and a commitment to maintaining investment-grade credit ratings, even as they ramp up spending to support growth.

Innovation Creates Demand

The rapid expansion of AI and cloud computing has made data centers the most significant new demand catalyst for natural gas. These facilities require not only reliable electric generation but also on-site backup power—roles that natural gas is uniquely positioned to fill. Simultaneously, any onshoring of manufacturing is expected to fuel industrial demand, further reinforcing the sector’s central role in supporting economic growth.

Record Growth

2024 was a year of records for the industry, with all-time highs in demand, production, and proven reserves. The sector is adding approximately one new customer every minute, and about 60 businesses begin new gas service every day, underscoring its essential role in meeting peak energy needs.1 Utilities are responding with projected gas investments that are much higher than in the recent past, reflecting growing confidence in long-term fundamentals.

Liquefied Natural Gas

Natural gas market momentum remains strong, with April 2025 setting new records for both U.S. production and deliveries to LNG facilities. “Feedgas” is the natural gas sent by pipeline to plants where it is cooled and turned into liquefied natural gas for export. Both domestic supply and feedgas volumes have continued to rise, with April year-over-year increases of 4.6% and 36.4%, respectively. This growth highlights the sector’s ability to meet rising demand at home and abroad, and its growing importance in the global energy market.2 Industry leaders also noted ongoing strategic investments in LNG export infrastructure, positioning themselves—and the U.S. sector—as key suppliers to global markets. With U.S. LNG export capacity expected to double by 2028, exports could account for up to 30% of domestic production.

Steady, Growing Dividends

The sector’s decades-long track record of steady, growing dividends remains a key differentiator for income-oriented investors. The Hennessy Gas Utility Fund exemplifies this strength: as of June 6, 2025, 47 out of 48 of the Fund’s holdings pay a dividend, with an average yield of 3.54%. Notably, the median dividend growth across these holdings stands at 4.04% over the past year and 4.07% annualized over the past three years. More broadly, a constructive regulatory environment is streamlining permitting processes, expediting rate case resolutions, and accelerating the development of critical infrastructure projects, all of which support earnings per share (EPS) growth and, in turn, dividend growth.

Outlook

With a strong foundation of demand, supportive regulation, and significant infrastructure investment, the natural gas sector appears well-positioned for continued growth. We believe natural gas utilities continue to offer attractive investment opportunities and play a vital, complementary role alongside clean energy. The Hennessy Gas Utility Fund provides exposure to companies that should benefit from the growing demand for natural gas.

1 American Gas Association 2025 Playbook

2 AGA, “Natural Gas Market Indicators – May 8, 2025.” Published May 8, 2025. Retrieved from https://www.aga.org/research-policy/resourcelibrary/natural-gas-market-indicators-may-8-2025/.

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