5 Ultra-High-Yield Dividend Stocks With Exposure to Natural Gas
Natural Gas Trading at Equivalent of $500/Barrel
Oil prices have been the talk of the town since the start of this year. At $91.64 per barrel, the price of West Texas Intermediate oil is up by 22% since the start of 2022 and 90% since the start of 2021. While those are big increases, it’s nothing compared to what’s been going on with natural gas prices, especially in Europe.
We tend not to think much about natural gas, aside from during barbecue season, but it’s the largest source of electricity in the U.S. and a major source of heating around the world.
Recently, soaring natural gas prices have been devastating the European economy. Businesses have been closing their doors and politicians have been asking their citizens to take cold showers and limit their heating in order to reduce the demand for natural gas. (Source: “German Cities Impose Cold Showers and Turn Off Lights Amid Russian Gas Crisis,” The Guardian, July 28, 2022.)
Natural gas futures are near a 14-year high, around $9.20 per million British thermal units. Natural gas prices in Europe have exploded by more than 250% in the last two months to the equivalent of more than $500.00 per barrel.
French one-year electricity forward contracts were recently above 1,000 euros per megawatt-hour, up 22 times from their 2010–2020 average of 45 euros. In Germany, one-year natural gas futures recently hit a record high of 1,050 euros per megawatt-hour. To just get through the winter heating season, Germany will need to cut its gas use by at least 20% and secure additional supplies. That’s going to be difficult for Europe’s largest economy to do. In England, meanwhile, power prices have hit new records, more than quintupling over the last year. (Source: “Europe’s Benchmark Power Price Breaks 1,000 Euros for First Time,” Bloomberg, August 29, 2022.)
In addition to surging inflation, natural gas prices in Europe have been soaring due to Russian supply cuts. That doesn’t mean Russia is hurting when it comes to natural gas sales; it’s just more selective about who it trades with. China and India have been more than happy to step in and flood their own countries with cheap Russian natural gas.
The U.S. isn’t facing the same kind of hardship as Europe because the U.S. has a massive supply of domestic natural gas. Still, natural gas prices have been rising in the U.S., just not as meteorically as they have been across the pond.
5 Dividend-Yielding Stocks Rising Due to Higher Natural Gas Prices
In the following table are five energy stocks with differing exposure levels to natural gas.
As you can see, they’ve all been trouncing the stock market and paying inflation-crushing dividends.
|Company Name||Stock Ticker||Share Price||Year-to-Date Gain||Annualized Dividend||Dividend Yield|
|Dorian LPG Ltd||NYSE:LPG||$14.43||51.5%||$5.50||35.5%|
|MV Oil Trust||NYSE:MVO||$12.23||60%||$1.90||15.6%|
|US Compression Partners LP||NYSE:USAC||$18.17||14%||$2.10||11.2%|
|Dorchester Minerals LP||NYSE:DMLP||$28.84||54%||$2.87||9.8%|
|Crestwood Equity Partners LP||NYSE:CEQP||$27.00||5%||$2.62||9.5%|
Dorian LPG Ltd (NYSE:LPG) is a liquefied petroleum gas (LPG) shipping company and a leading owner and operator of modern very large gas carriers (VLGC).
MV Oil Trust (NYSE:MVO) holds interests in about 900 oil and gas wells in the Mid-Continent region in the states of Kansas and Colorado. The Houston, TX-based company has raised its dividend amount for the last six consecutive quarters.
USA Compression Partners LP (NYSE:USAC) is an oil and gas equipment services company that provides compression services under fixed-term contracts to oil and natural gas producers, processors, gatherers, and transporters.
Dorchester Minerals LP (NASDAQ:DMLP) is an oil and gas exploration and production company. The partnership’s independent engineering consultant estimates the company’s total proved oil and natural gas reserves to be 92.9 billion cubic feet of natural gas equivalent. Management has raised DMLP stock’s high-yield dividend for six consecutive quarters.
Crestwood Equity Partners LP (NYSE:CEQP) owns and operates midstream assets, primarily in the Bakken Shale, Delaware Basin, Powder River Basin, Marcellus Shale, and Barnett Shale.
The Lowdown on Natural Gas Stocks
If the stock market is about opportunity, then stocks related to natural gas should be on every investor’s radar right now.
That’s especially true when it comes to the shares of companies that have been raking in cash and rewarding investors with ultra-high-yield dividends. It’s great to see a company’s underlying share price grow, and it’s even better to receive frothy quarterly payments.