Major oil and gas stocks with high dividend yields offer investors the opportunity for steady cash flow. Here’s a look at the five top US oil and gas dividend stocks.
Major oil and gas stocks have historically offered investors high dividend yields, especially when prices are strong.
In 2022, oil and gas stocks have continued their recovery from COVID-19 lockdowns, with some analysts calling for a multi-year bull market. The impact of Russia’s aggression in Ukraine has further highlighted already precarious supply problems.
Because of those and other factors, this segment of the stock market is flush with dividend yields of over 5 percent and as high as 11 percent. A dividend is part of a company’s profits that is paid out regularly to shareholders, typically quarterly.
“The dividend yield is a financial ratio that represents the dividend income per share, divided by the price per share,” as per Investopedia. “It is considered a sign of clear financial health and confidence for a company to pay out dividends.”
A dividend's payout ratio is the total amount of dividends paid out to shareholders relative to the net income of the company. Dividend aristocrats are those stocks that consistently pay a dividend, as well as annually increase the size of the payout.
For those who prefer a long-term approach to investing, oil and gas stocks with high dividends allow for a steady flow of income and the opportunity for investors to increase their equity holdings.
The Investing News Network has compiled a list of the five top US oil and gas dividend stocks as of June 16, 2022, using TradingView’s stock screener. The energy sector companies on this list have strong dividends yields of greater than 5 percent, as well as debt-to-equity ratios (total equity divided by total liabilities) of less than 0.26. This ratio shows how much company financing is generated from debt rather than equity.
Market capitalization: US$130.56 million; dividend yield: 11.59 percent; debt-to-equity ratio: 0.0
Formed by VOC Brazos Energy Partners, the VOC Energy Trust acquires and holds 80 percent of the net profits interest from the production and sale of its stakes in oil and gas properties in Kansas and Texas.
VOC Energy Trust’s high-yield dividend and low debt-to-equity ratio is highly attractive to investors. In April 2022, the firm raised its quarterly dividend to US$0.28 per share. The move up constitutes the fifth consecutive quarterly dividend raise for VOC Energy Trust.
Market capitalization: US$3.11 billion; dividend yield: 10.42 percent; debt-to-equity ratio: 0.0691
Black Stone Minerals has exploration operations in several prime US oil and gas districts, including the Louisiana-Mississippi salt basins, the Western Gulf, the Permian basin, the Palo Duro basin, the East Texas basin, the Anadarko basin, the Appalachian basin, the Arkoma basin, Bend Arch-Fort Worth and Southwestern Wyoming.
This diversification, coupled with a high dividend yield and a low debt-to-equity ratio, has attracted investment from hedge funds such as Crescent Capital Consulting and Annandale Capital.
Market capitalization: US$58.74 billion; dividend yield: 6.75 percent; debt-to-equity ratio: 0.2546
Oil and gas exploration and production company Pioneer Natural Resources Company benefits from multi-year drilling inventory in its core operating areas in the Permian basin of West Texas. The region is home to the world’s second largest oil field.
In May, the company declared a quarterly base-plus-variable cash dividend of US$7.38 per common share, payable on June 14. "Pioneer continued driving value for shareholders during the first quarter, generating over $2.3 billion in free cash flow, with nearly 90% of the free cash flow being returned to shareholders through our differentiated return of capital program,” CEO Scott D. Sheffield stated. “Our peer-leading return of capital strategy, which combines a strong base dividend, a substantial variable dividend and opportunistic share repurchases, creates significant long-term value for shareholders.”
Market capitalization: US$1.02 billion; dividend yield: 6.73 percent; debt-to-equity ratio: 0.0111
Dallas-based Dorchester Minerals is the owner of producing and non-producing oil and natural gas mineral, royalty, overriding royalty, net profits and leasehold interests across 28 US states.
The top oil and gas dividend stock reported net income for the quarter ended March 31, 2022, of US$30.62 million. That’s compared to US$11.8 million of reported net income for the same period in 2021. Those gains in net income have also translated into healthy dividend payments for the company’s shareholders.
Market capitalization: US$191.68 million; dividend yield: 5.47 percent; debt-to-equity ratio: 0.1815
Alvopetro Energy is on the path to becoming an independent upstream and midstream operator in Brazil’s natural gas industry. The company began offering shareholders quarterly dividends in September 2021.
This past May, Alvopetro announced that its gas plant expansion was on track to be completed in early July. “Following the expansion, our available processing capacity is expected to increase by 25% to at least 500,000 cubic metres per day," the press release states.
This is an updated version of an article first published by the Investing News Network in 2021.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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