VOC Energy Trust Stock: Shares of 15%-Yielder Up 15% Over Last Month
November 4, 2024
Reasons to Be Bullish on VOC Stock
Crude oil is down from its 2020 highs of $125.00 per barrel, trading near $72.00 per barrel on underwhelming global demand.
With that said, oil prices have been swinging since early September as traders debate whether growing tensions in the Middle East will develop into something more than a regional war. There are also concerns that Israel could target some of Iran’s energy infrastructure. Either scenario could see crude oil prices spike.
Near-term challenges aside, the longer-term outlook for oil and gas remains solid. The Organization of the Petroleum Exporting Countries (OPEC) raised its forecast for global oil demand for the medium and long terms, pointing to growth in India, Africa, and the Middle East and the slower adoption of electric vehicles and cleaner fuels.
OPEC expects world oil demand to hit 118.9 million barrels per day by 2045 and demand to reach 120.1 million barrels per day (BPD) by 2050. Admittedly, the organization is going to be bullish on oil and gas, but it suggests that there is no peak oil demand on the horizon.
And that’s good for the broader energy industry and oil and gas exploration & development (E&P) companies like VOC Energy Trust (NYSE:VOC).
VOC Energy Trust, which was formed by VOC Brazos Energy Partners, L.P., is an oil and gas E&P company that acquires and holds 80% of the net profits from the production and sale of interests in oil and natural gas properties in Kansas and Texas. (Source: “Form Q-10,” VOC Energy Trust, August 9, 2024.)
According to the most recent data, VOC Energy’s underlying properties had interests in 452.5 net producing wells and 51,147.2 net acres. The company had proved reserves of approximately 2.9 million barrels of oil equivalent (MMBoe) attributable to the Kansas underlying properties and approximately 5.4 MMBoe attributable to the Texas underlying properties.
VOC Energy Trust Stock: Declares Distribution of $0.18 Per Unit
VOC Energy Trust stock’s quarterly dividend payout is based on the net cash proceeds available for distribution. As a result, that number will change every quarter according to supply/demand and the price of oil and natural gas.
Now, thanks to the company’s high cash flow throughout 2021 and 2022, management was able to raise its high-yield dividend payout for six consecutive quarters, from $0.03 per share in January 2021 to $0.38 per unit in July 2023; that’s an increase of 1,166%.
Of course, that doesn’t mean VOC Energy’s variable dividend always goes up. By its very nature, a variable dividend will fluctuate.
In the fourth quarter of 2023, VOC Energy Trust stock paid out $0.225 per unit, versus $0.19 per unit in February 2024.
Over the last three quarters, VOC Energy’s payout has held at $0.18, or $0.72 per unit on an annual basis, for a forward dividend yield of 15%. (Source: “VOC Energy Trust Announces Quarterly Distribution,” VOC Energy Trust, October 17, 2024.)
VOC Energy Trust Stock Up 15% Since September
Because the distribution is based on net cash proceeds, VOC Energy’s share price will also fluctuate in a similar manner. As you can see in the chart below, the company’s distribution and share price follow a similar trajectory.
Unfortunately, VOC Energy Trust stock has not exactly given shareholders reason to cheer of late, as it’s down 36% on an annual basis and 20% in 2024.
There’s more to VOC stock’s distribution and share price performance than just the price of oil and gas and demand. There are some unknowns that will impact its profitability, too. Other important factors include the results of drilling operations, actions taken by OPEC, and Black Swan events, to name a few.
Ongoing geopolitical tensions in the Middle East have helped propel VOC Energy Trust stock approximately 15% higher since early September.
Chart courtesy of StockCharts.com
On the technical front, the outlook for VOC stock looks solid. At a current price of $5.31 per unit, VOC Energy Trust stock is above its 50-day moving average (MA) of $4.98 per share, but below the 200-day MA of $5.43 per share.
As of this writing (October 23), VOC Energy Trust stock’s 50-day MA is approaching its 200-day MA. Should the former cross over the latter, it would signal a golden cross, which is a bullish technical crossover. If this occurs, we could see VOC units rally higher.
Chart courtesy of StockCharts.com
The Lowdown on VOC Energy Trust Stock
VOC Energy Trust is an oil and gas E&P play with a large interest in the net proceeds from oil and natural gas properties in Kansas and Texas. It continues to generate a lot of cash, which allows it to provide VOC Energy Trust stockholders with an ultra-high-yield dividend.
Keep in mind that VOC Energy Trust stock’s dividend fluctuates from quarter to quarter. And variable dividends are not right for every investor. That said, in this current environment, the dividend payout could help investors wait out a potential rebound in VOC’s share price.
