CRT Stock: This Bullish 10.8%-Yielder Pays Monthly
October 18, 2024
Cross Timbers Royalty Trust Stock Up 20% Over Last Month
Recent volatility has been bullish for energy stocks like CRT stock, with the sector turning bullish almost overnight.
In September, energy had the worst one-year performance (-4.59%), hampered by weakening demand and potential increased output from Organization of the Petroleum Exporting Countries Plus (OPEC+).
However, energy stocks got a big jolt at the start of October on fears of widening tensions in the Middle East. While armed conflict has been ongoing since October 2023 between Israel and Hamas-led Palestine, things have escalated since the start of October 2024 between Israel and Iran.
In a matter of days, energy has gone from the worst-performing to the best-performing sector on Wall Street. As of this writing (October 7), the energy sector has advanced six percent over the last week.
The recent gains in oil prices, from $65.00 per barrel to $75.00 per barrel, is significant but still modest in the grand scheme of things. Oil is still trading well below the 2024 high of $87.00 per barrel set in April.
Though Goldman Sachs has predicted that oil could experience a $20.00-per-barrel increase should Iran’s oil supply pull back due to the conflict. Iran is responsible for around four percent of global oil output. That could result in oil prices surging to around $95.00 per barrel.
Should the conflict expand beyond Israel and Iran, production in the entire region could close down. If that occurs, all bets are off.
One way investors can play market uncertainty and get paid monthly is with Cross Timbers Royalty Trust (NYSE:CRT).
About Cross Timbers Royalty Trust
Cross Timbers Royalty is an oil & 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 October 7, 2024.)
XTO Energy Inc. owns the underlying properties out of which these net profits interests are conveyed. The net profits interests are the only assets of the trust, other than cash held for trust expenses and for distribution to unitholders.
Most of Cross Timbers Royalty Trust’s net profits income is from long-lived gas properties in the San Juan Basin of northwestern New Mexico. Because the 90% net profits interests aren’t subject to production or development costs, the net profits income generally only varies due to changes in sales volumes or prices.
The trust’s 75% net profits interests are conveyed from underlying working interests in seven large, predominantly oil-producing properties in Texas and Oklahoma. The net profits 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.
And CRT Stock Pays a Monthly Dividend
As an energy company, Cross Timbers’ monthly distribution will fluctuate based on volume, prices, and development costs. In the second quarter, it reported net profit of $1.56 million, down from $3.16 million in the second quarter of 2023. (Source: “2nd Quarter Report 2024,” Cross Timbers Royalty Trust, last accessed October 7, 2024.)
Chart courtesy of StockCharts.com
The big 51% drop in the company’s second-quarter 2024 net profits was a result of lower gas prices and increased development costs, partially offset by increased gas and oil production and higher oil prices.
This resulted in distributable income for the quarter of $1.34 million, or $0.224293 per unit. The breakdown for Cross Timber’s second-quarter monthly distributions was $0.135867 (April), $0.058252 (May), and $0.030174 (June), for a quarterly total of $0.221293 per unit.
The company hasn’t announced its third-quarter results yet, but we know how much it paid each month during the quarter: $0.096137 (July), $0.05515 (August), and $0.102230 (September), for a third-quarter distribution of $0.253542.
On a year-to-date basis, CRT stock’s distribution is $0.726704 per unit and $1.13 on an annual basis, for a forward yield of 10.88%.
Over the last 10 years, Cross Timber stock’s annual payouts have vacillated along with energy prices, but those payouts have been going up steadily since 2020. Under the right conditions, CRT stock’s payout can be quite lucrative. In 2008, its annual distribution was a record $5.15 per unit. (Source: “Cash Distributions,” Cross Timbers Royalty Trust, last accessed October 7, 2024.)
| Dividend Year | Distribution |
| 2024 (year to date) | $0.72 |
| 2023 | $1.92 |
| 2022 | $1.95 |
| 2021 | $1.11 |
| 2020 | $0.77 |
| 2019 | $0.87 |
| 2018 | $1.42 |
| 2017 | $1.00 |
| 2016 | $1.06 |
| 2015 | $1.35 |
| 2014 | $2.65 |
The Lowdown on CRT Stock
Cross Timbers Royalty Trust is an oil and gas exploration and production company with a 90% net profit interest in properties in oil-rich basins in Texas, Oklahoma, and New Mexico.
While the energy sector can be volatile, right now, tailwinds are lifting CRT stock considerably higher; it’s up 21% over the last month alone. While CRT stock will no doubt moderate as conflict in the Middle East eventually subsides, investors can take solace in knowing that under the right conditions, Cross Timbers stock can really fly. It was one of the best performing oil and gas stocks in 2021 (+53%) and 2022 (+144%).
Whether oil prices are rising or falling though, CRT shareholders are on the receiving end of a reliable, ultra-high-yield monthly distribution.
