President Trump’s new round of sanctions on Russia’s oil shipments directly led to an increase in the spot price of Brent crude oil in January. In the previous month, the price hovered around $79 per barrel, a $5 increase from December. However, prices fell back to their usual rate as the month passed and consumers regained focus.

The scene has been quite the same in February. As a direct result of Trump’s new array of tariffs on China, Mexico, and Canada, the Brent spot price began in February at around $76 per barrel. However, a 30-day delay in implementing these tariffs might cause the price to stay afloat for a little longer as these tariffs could affect oil trade routes.

Amid this volatile landscape, Dorchester Minerals, L.P. (DMLP - Get Rating) seems to be well-positioned to capitalize on the growing oil and gas prices. Reflecting its strong market position and growth potential, DMLP’s stock has climbed 3.3% over the past six months and 4.7% over the past year, closing its latest trading session at $31.94.

Now, let us discuss the factors that could affect the stock’s growth trajectory.

Recent Developments

In its 2024 mid-year & acquisition update report, DMLP announced impressive results regarding its production. The company reported a 38% increase in its oil production from 2019 to 2024. Additionally, it also showcased a 34% and an impressive 207% rise in its gas and NGL production, respectively, over the same period.

Moreover, the company also highlighted its acquisition of the Delaware and Midland basins, as well as the DJ basin.

Stable Historical Growth

DMLP’s performance is evident in its steady growth across key metrics. Over the past three years, the company’s revenue and EBITDA have grown at a CAGR of 31.4% and 33%, respectively. Meanwhile, operation income (EBIT) and total assets expanded at respective CAGRs of 29.9% and 54.1%.

Additionally, the company’s net income and EPS have also grown at a CAGR of 29.7% and 24.1%, respectively.

Sound Financials

For the fiscal 2024 third quarter that ended September 30, 2024, DMLP’s total operating revenues increased 25.5% year-over-year to $53.47 million. The company’s net income and net income per common unit rose 23.6% and 19.2% from the prior year’s quarter to $36.41 million and $0.87, respectively.

As of September 30, 2024, DMLP’s cash and cash equivalents amounted to $56.47 million, compared to $47.03 on December 31, 2023.

Dividend Growth

On January 23, 2025, DMLP declared its fourth quarter cash distribution of $0.739412 per common unit, which was payable on February 13, 2025, to shareholders of record on February 3, 2025. The commitment to returning value may appeal to long-term investors, potentially driving stock demand.

Currently, DMLP pays an annual dividend of $2.96, which translates to a 9.26% yield at the current price level. The stock’s dividend payouts have increased at a CAGR of 18.6% over the past three years. Its four-year average dividend yield is 10.22%.

Robust Profitability

DMLP’s trailing 12-month gross profit margin of 95.48% is 107.9% higher than the industry average of 45.93%. Its trailing 12-month levered FCF margin stands at 55.33%, 694.5% higher than the industry average of 6.96%.

The company’s trailing-12-month ROCE stands at 38.23%, 216.4% higher than the industry average of 12.09%. Also, the stock’s trailing-12-month asset turnover ratio of 0.56x is 20.7% higher than the industry average of 0.46x.

POWR Ratings Reflects Optimism

DMLP’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

DMLP has an A grade for Quality, in line with its higher-than-average profitability metrics. Within the A-rated MLPs – Oil & Gas industry, DMLP is ranked #8 out of 22 stocks.

Beyond what is stated above, we have also given DMLP grades for Momentum, Growth, Value, Sentiment, and Stability. Get all DMLP ratings here.

Bottom Line

DMLP’s robust growth in the production of gas, oil and NGL showcases its operational excellence. Additionally, its commitment to returning value to shareholders is evident through its recent dividend payouts.

DMLP’s solid financials, coupled with its high profitability and low volatility, in line with its 24-month beta of 0.46, place the stock in a lucrative position for investors.  With oil prices on the rise, the stock could be an excellent addition to one’s portfolio.

How Does Dorchester Minerals, L.P. (DMLP) Stack Up Against Its Peers?

Although DMLP’s near-term outlook appears sound, it may be worthwhile to explore its industry peers, who exhibit even stronger POWR Ratings. So, consider these A (Strong Buy) and B (Buy) rated stocks from the MLPs – Oil & Gas industry:

MPLX LP (MPLX - Get Rating)

CrossAmerica Partners LP (CAPL - Get Rating)

Star Group, L.P. (SGU - Get Rating)

To explore more A or B-rated MLPs – Oil & Gas stocks, click here.

What To Do Next?

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DMLP shares were unchanged in premarket trading Monday. Year-to-date, DMLP has declined -1.86%, versus a 4.03% rise in the benchmark S&P 500 index during the same period.

About the Author: Aritra_Gangopadhyay

Aritra is a financial journalist dedicated to breaking down complex financial topics into simple, actionable insights. Holding a Master’s degree in Economics, he uses his analytical expertise to help investors uncover unique opportunities for long-term success. More...

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