23%-Yielding VOC Energy Stock Hikes Dividend 137%
VOC Energy Trust Inc’s Outlook Bullish on Industry Tailwinds
It’s often a good idea for investors to strike while the iron is hot. That’s certainly been the case with VOC Energy Trust (NYSE:VOC) and other energy stocks. Energy was the best-performing sector of the stock market in 2021, climbing by 53%. That year, the S&P 500 only climbed by 27%.
Energy stocks’ momentum has continued in 2022, with the Energy Select Sector SPDR Fund (NYSEARCA:XLE) up by roughly 30% year-to-date and 38% year-over-year. The S&P 500, meanwhile, is down by 24% year-to-date and 18% year-over-year. The big gains from XLE stock are impressive, but not as stunning as the gains from VOC stock: 45% year-to-date and 53% year-over-year.
VOC Energy Trust, which was formed by VOC Brazos Energy Partners, L.P., 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, 2022.)
According to the most recent data, the company’s underlying properties have an interest in 452.5 net producing wells and 51,147 net acres. The company has 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 Stock’s Dividend Hiked for 6th Consecutive Quarter
Thanks to its high cash flow, VOC Energy Trust’s management raised VOC Energy stock’s ultra-high-yield dividend for the last six consecutive quarters. Most recently, in July, the company announced a quarterly distribution of $0.38 per unit, up by 137% from $0.16 in the same period of 2021 and up by 35% from $0.28 in the first quarter of 2022. (Source: “VOC Energy Trust Announces Trust Quarterly Distribution,” VOC Energy Trust, July 20, 2022.)
Not surprisingly, the company’s distribution amount fluctuates based on volume and sale prices. In the first quarter, the average sale price for oil was $78.89 per barrel, while the average sale price for natural gas was $6.44 per 1,000 cubic feet (MCF), for gross proceeds of $9.8 million and net cash available for distribution of $4.8 million, or $0.28 per unit. (Source: “VOC Energy Trust Announces Trust Quarterly Distribution,” VOC Energy Trust, April 20, 2022.)
During the second quarter, the average sale price for oil was $104.64 per barrel, while the average sale price for natural gas was $6.65 per MCF, for total gross proceeds of $14.2 million. Of that, $6.5 million was available for distribution, or $0.38 per unit, for a yield of 23.2%.
VOC stock’s payout ratio is 1:1 because the trust returns all of its earnings to its shareholders.
Chart courtesy of StockCharts.com
The Lowdown on VOC Energy Trust
VOC Energy Trust has been firing on all cylinders. The company generates a lot of cash, allowing it to provide VOC Energy stockholders with reliable, growing, ultra-high-yield dividends.
Despite growing fears of a recession, oil prices are expected to stay around $100.00 per barrel in 2022 and 2023 as a supply crunch returns to the energy sector. This bodes well for VOC stock’s share price and dividends.