I don’t have much experience with these types of companies, but Dorchester Minerals (DMLP) looks like a fantastic investment.
They are a publicly traded firm that owns royalty interest in both oil and natural gas.
- Most profit is payed back as a dividend.
- The dividend yield is (currently) 11%.
- And they eschew debt.
I mean, their 2018 annual report goes as far as to say:
We do not have a credit facility in place, nor do we anticipate doing so. We do not anticipate incurring any debt, other than trade debt incurred in the ordinary course of our business. Our partnership agreement prohibits us from incurring indebtedness, other than trade payables, (i) in excess of $50,000 in the aggregate at any given time; or (ii) which would constitute “acquisition indebtedness” (as defined in Section 514 of the Internal Revenue Code of 1986, as amended), in order to avoid unrelated business taxable income for federal income tax purposes. We may finance any growth of our business through acquisitions of oil and natural gas properties by issuing additional limited partnership interests or with cash, subject to the limits described above and in our partnership agreement. Under our partnership agreement, we may also finance our growth through the issuance of additional partnership securities, including options, rights, warrants and appreciation rights with respect to partnership securities from time to time in exchange for the consideration and on the terms and conditions established by our general partner in its sole discretion. However, we may not issue limited partnership interests that would represent over 40% of the outstanding limited partnership interests immediately after giving effect to such issuance or that would have greater rights or powers than our common units without the approval of the holders of a majority of our outstanding common units. Except in connection with qualifying acquisitions, we do not currently anticipate issuing additional partnership securities.
Subject to the volatility of fluctuating energy prices, the business looks straightforward.
X revenue becomes a pass-through X(Y) payout.
Wish I could buy about 30,000 shares tomorrow as part of my long-term strategy.
This is where a sizable investment in Dorchester Minerals would become an income stream to your diversified base.
Bird by bird, share by share, I know.