Cross Timbers Royalty Stock: High Yielder Pays Monthly Dividends

CRT Stock Up 75% Year-Over-Year

Crude oil prices are down from their March 2022 high of $130.00 per barrel, but they’ve found support near $70.00 per barrel.

While there’s some disagreement about where oil prices are heading in the second half of 2022, supply cuts from Saudi Arabia and fears about lower demand have been keeping oil prices in a tight range.

One way for investors to play this uncertainty and get paid monthly is with shares of Cross Timbers Royalty Trust (NYSE:CRT).

The Dallas, Texas-based company isn’t exactly an overlooked energy play with a share price that’s poised to rip higher. Cross Timbers Royalty stock was one of the best-performing oil and gas stocks in 2021 (up 53%) and 2022 (up 144%).

It’s been a slightly different story in 2023. In the opening weeks of this year, Cross Timbers Royalty units climbed by 28%, hitting a new record high of $29.26. Uncertainty about the economy and how a potential recession will affect supply and demand has been keeping a lid on oil prices for the time being.

CRT stock is down from its record level to about $22.00 per unit. Despite the slight pullback, Cross Timbers Royalty Trust units are still up by 17% over the last three months and 75% over the last 12 months (as of this writing).

I’ve been following Cross Timbers Royalty stock for a while now. CRT units are up by more than 80% since I wrote about the company in July 2021 and up by 13% since I profiled it again in July 2022.

Chart courtesy of StockCharts.com

 About Cross Timbers Royalty Trust

Cross Timbers Royalty is an oil and natural gas exploration and production company that holds 90% of the net profit interests in certain royalty and overriding-royalty property interests in Texas, Oklahoma, and New Mexico. It also holds 75% of the net profit interests in certain working-interest properties in Texas and Oklahoma. (Source: “About Us,” Cross Timbers Royalty Trust, last accessed July 7, 2023.)

XTO Energy Inc. owns the underlying properties from which these net profit interests are conveyed. The net profit interests are Cross Timbers Royalty’s only assets, other than cash held for expenses and distributions to unitholders.

Most of Cross Timbers Royalty Trust’s net profit income is from long-lived gas properties in the San Juan Basin of northwestern New Mexico. Because the 90% net profit interests aren’t subject to production or development costs, the net profit income generally only varies due to changes in sales volumes or prices.

The trust’s 75% net profit interests are conveyed from underlying working interests in seven large, predominantly oil-producing properties in Texas and Oklahoma. The net profit income from these properties is calculated separately for each state and is reduced by production and development costs.

Unlike some energy companies, Cross Timbers Royalty Trust doesn’t plow money into developing new wells. Instead, it pays out virtually all of its earnings to CRT stockholders.

Cross Timbers Royalty Stock’s Distributions Up 42% Year-to-Date

Not only have Cross Timbers Royalty units been on a great run in terms of price, but they’ve been rewarding buy-and-hold investors with monthly dividends.

As an energy company, Cross Timbers Royalty’s monthly distribution fluctuates based on volumes, prices, and development costs.

In May, CRT stock paid a distribution of $0.185059 per unit. During that month, Cross Timbers Royalty Trust sold 16,000 barrels of oil at an average price of $72.67 per barrel and 88,000 Mcf (1,000 cubic feet) of gas at $11.96 per Mcf. (Source: “Cross Timbers Royalty Trust Declares June Cash Distribution,” Cross Timbers Royalty Trust, June 20, 2023.)

In June, the company paid monthly dividends of $0.07704 per unit, for a current yield of 4.1%. During that month, the trust sold 13,000 barrels of oil at $74.36 per barrel and 78,000 Mcf of gas at an average price of $6.15 per Mcf.

As the company’s monthly distribution fluctuates, so does its dividend yield. Under the right conditions, Cross Timbers Royalty stock’s payout can be quite lucrative. CRT stock’s annual payouts have gone up steadily since 2020. In 2008, Cross Timbers Royalty Trust’s annual distribution was a record $5.15 per unit.

(Source: “Cash Distributions,” Cross Timbers Royalty Trust, last accessed July 5, 2023.)

As of this writing, on a year-to-date basis, Cross Timbers Royalty Trust’s payout is up by 42% year-over-year. As the above table shows, so far this year, Cross Timbers Royalty stock’s dividend has totaled $1.11.

The Lowdown on Cross Timbers Royalty Trust

The energy sector is facing headwinds, but the long-term outlook for oil and gas companies is robust.

This bodes well for Cross Timbers Royalty stock’s price and its high-yield monthly dividends. By all accounts, it appears as though 2023 will be another year of distribution growth for this dividend stock.