VTS Stock: An Energy Play with an Inflation-Crushing Dividend Yield
April 8, 2025
Could Shareholders See a Massive Windfall?
If you’re an income investor, oil stocks should be on your radar. This is because energy companies tend to generate significant cash flow when business is good and return money to their shareholders. And, right now, business is good.
Despite all the talk about green energy and renewables, oil demand remains strong, and the companies involved in production, exploration, and royalties could provide investors with a windfall. Just patience is required.
With all this in mind, take a look at Vitesse Energy Inc (NYSE:VTS).
VTS stock isn’t really getting the attention it deserves, but for those looking to make inflation-crushing income, this stock offers that.
What Does Vitesse Energy Do?
Vitesse Energy is not a typical oil company. Unlike big oil giants that engage in the exploration, development, and production of oil properties, or invest in drilling rigs and pipelines, Vitesse Energy is a “non-operator.”
Put simply, instead of handling the expensive and risky business of drilling for oil, Vitesse invests in oil and gas wells operated by other oil companies. This essentially allows the company to collect royalties and profits from production without taking on the operational risks. Energy companies do the heavy lifting; they just collect the cash.
Vitesse Energy’s wells are primarily located in the Williston Basin.
All together, the company has more than 7,300 producing wells diversified among more than 30 operators. (Source: “Investor Presentation,” Vitesse Energy Inc, last accessed April 2, 2025.)
Rock-Solid Financials: Why Vitesse Energy Stands Out
Looking at Vitesse Energy’s financial performance, you can say it’s solid, to say the least.
Its oil and natural gas production averaged 13,003 barrels of oil equivalent per day, resulting in total revenue for the year of $247.1 million. It’s also worth noting that, during the year, Vitesse Energy had hedges that provided protection on 59% of oil production.
The company’s net income for 2024 was $21.1 million, or $0.64 per diluted share. Its adjusted net income for the year was $35.7 million and adjusted EBITDA were $156.8 million.
What’s ahead for 2025?
Vitesse Energy expects production on a two-stream basis to be in the range of 17,000–18,000 barrels of oil equivalent per day for the full year of 2025. If the company meets the midpoint of the guidance, it would be 35% higher compared to 2024.
The company has also budgeted capital spending in the range of $130.0 to $150.0 million for 2025. (Source: “Vitesse Energy Announces Fourth Quarter and Full Year 2024 Results, Increases Quarterly Cash Dividend to $0.5625 and Issues 2025 Production and Capital Expenditures Guidance,” Vitesse Energy Inc, March 11, 2025.)
Wall Street analysts are projecting revenue of $304.44 million—an increase of close to 26% year over year—and earnings per share (EPS) of $1.07 in 2025. For 2026, they are expecting revenue of $327.66 million and EPS of $1.13. (Source: “Analysis,” Yahoo! Finance, last accessed April 2, 2025.)
All in all, the financial performance and outlook make the case for owning VTS stock stronger.
VTS Stock: A Dividend Powerhouse
Now, looking at the dividends, I’d say that VTS stock checks all the boxes.
It has a high dividend yield of 10.42%, paying $2.25 per share on an annualized basis.
Let’s put this into perspective. The S&P 500’s average dividend yield is around 1.5%. Even major oil companies like Exxon Mobil Corp (NYSE:XOM) and Chevron Corp (NYSE:CVX) have dividend yields of around three to four percent. VTS stock’s 10.42% yield blows those numbers out of the water.
Here’s the thing: Vitesse Energy has already increased its dividends multiple times in the recent quarters. Since the cash flow is solid here, plus the operating costs are low, it’s hard not to anticipate more dividend hikes in the coming quarters and years.
Chart Courtesy of StockCharts.com
VTS stock’s performance has been subdued, but that doesn’t mean there isn’t potential here.
VTS stock has increased 3.16% over the past 60 days and 7.76% over the past 12 month. But Wall Street analysts have a high target for VTS stock of around $33.00.
The Lowdown on VTS Stock
Dear reader, what’s not to like about VTS stock? You get…
- An inflation-crushing dividend yield
- A great financial performance that’s expected to improve even more
- Production that’s expected to increase
- Capital spending, which could mean more production
- Low operational risk
On top of all of this, Vitesse insiders have some significant “skin in the game.” They own close to 17% of all outstanding shares. This means that they have incentive to make sure the company performs well.
Moreover, 319 institutions own VTS stock, which indicates some strong belief in Vitesse Energy Inc’s long-term potential.
