DMLP Stock Trading Near Record-High Level
Amid the current stock market volatility, it’s always nice to find a stock that provides investors with high capital appreciation and ultra-high-yield dividends. That’s what you get right now with Dorchester Minerals LP (NASDAQ:DMLP).
An oil and natural gas exploration and production company, Dorchester Minerals owns royalty properties (aka interests) in about 592 counties and parishes in 28 states. This diversity gives it exposure to virtually every single oil and gas producing basin in the U.S., which allows the partnership to take advantage of multiple commodity prices and development cycles. (Source: “Form 10-K,” United States Securities and Exchange Commission, February 23, 2023.)
Dorchester Minerals LP’s independent engineering consultant has estimated that its total proved oil and gas reserves are 92.7 billion cubic feet of natural gas equivalent. Of that total, 19% are attributable to the partnership’s net profits interests and 81% are attributable to its royalty properties. Approximately half of the company’s proved reserves are oil and 42% are gas. (Source: “Dorchester Minerals, L.P. Announces 2022 Results,” Dorchester Minerals LP, February 23, 2023.)
Thanks to high oil and natural gas prices, Dorchester Minerals stock’s dividends and share price remain robust despite economic headwinds and growing fears of an upcoming recession.
Shares of Dorchester Minerals LP are up by about 30% year-over-year, and on February 28, they hit a new all-time record high of $32.10. DMLP stock has retreated a little since then, trading near a tested support level of $27.50.
As an energy exploration and production company, Dorchester Minerals LP pays quarterly distributions that fluctuate based on oil and gas prices, which are, in turn, based on supply and demand.
Lately, Dorchester Minerals has been doing quite well. For 2022, the partnership announced that its operating revenues grew by 82% to $170.8 million. Its net income jumped in 2022 by 86% year-over-year to $130.6 million, or $3.35 per share. (Source: Dorchester Minerals LP, February 23, 2023, op. cit.)
The company’s financial results have a material impact on its dividends. As you can see in the following chart, Dorchester Minerals stock’s distributions have fluctuated quite widely over the years.
Chart courtesy of StockCharts.com
Recently, DMLP stock’s dividends have been on fire. Since the start of 2021, the partnership has raised its payout in seven out of eight quarters. Between January 2021 and October 2022, management hiked Dorchester Minerals stock’s distribution by 244% to $1.135 per unit. (Source: “Distribution History,” Dorchester Minerals LP, last accessed March 17, 2023.)
In January 2023, the company announced a quarterly distribution of $0.884339 per unit. (Source: “Dorchester Minerals, L.P. Announces Its Fourth Quarter Distribution,” Dorchester Minerals LP, January 19, 2023.)
In the fourth quarter of 2022, cash receipts attributable to the partnership added up to about $29.0 million. Roughly 79% of those receipts were from oil sales in the period of September through November and natural gas sales in the period of August through October. About 21% of the receipts were from sales in previous periods.
Also during the fourth quarter, cash receipts attributable to Dorchester Minerals LP’s net profits interests totaled approximately $9.5 million. About 52% of those receipts were from oil and gas sales in the period of August through October, and approximately 48% of the receipts were from sales in previous periods.
Following the company’s tremendous fourth-quarter results, it will be interesting to see what DMLP stock’s next dividend will be.
The Lowdown on Dorchester Minerals LP
Dorchester Minerals has been light on news, and you never hear any comments from management, but the company makes up for that with wonderful quarterly financial results and inflation-crushing, ultra-high-yield dividends.
The outlook for Dorchester Minerals stock is solid. The North American oil and natural gas industry raked in record profits in 2022, and that momentum is expected to continue in 2023. After a modest year-over-year contraction in the fourth quarter of 2022, worldwide oil demand is expected to rise in 2023 by two million barrels per day to 101.9 million barrels per day. (Source: “Oil Market Report – February 2023,” International Energy Agency, last accessed March 17, 2017.)
This should end up benefiting DMLP stockholders.