3 Energy Stocks With Dividend Yields Over 10% And With Very Low P/E Ratios

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Includes: NRP, NTI, VOC
by: Arie Goren

Some investors are looking for high current income rather than income growth. I have searched for very profitable stocks with dividend yields over 10%. In this article, I describe three such stocks. In my opinion, these three energy stocks can reward an investor a capital gain along with the very rich dividend. I recommend readers use this list of stocks as a basis for further research. All the data for this article were taken from Yahoo Finance, Portfolio123 and finviz.com, on October 09, before the market open.

Natural Resource Partners LP (NYSE:NRP)

Natural Resource Partners L.P., through its subsidiaries, engages in the ownership, management and leasing of mineral properties in the United States.

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Source: company presentation

Natural Resource Partners has a very low trailing P/E of 10.58 and a very low forward P/E of 11.30. The forward annual dividend yield is very high at 11.36%, and the payout ratio is at 120%. The annual rate of dividend growth over the past five years was at 3.69%.

Natural Resource Partners has recorded revenue, EPS and dividend growth during the last three years and the last five years, as shown in the table below.

Source: Portfolio123

The chart below emphasizes the Natural Resource Partners' revenue growth and diversification.

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Source: company presentation

Natural Resource Partners will report its latest quarterly financial results on November 04. NRP is expected to post a profit of $0.36 a share, a $0.12 decline from the company's actual earnings for the same quarter a year ago.

Natural Resource Partners has recorded revenue, EPS and dividend growth, and considering its low P/E ratio, NRP stock can move higher. Furthermore, the very rich dividend represents a gratifying income.

Risks to the expected capital gain and to the dividend payment include a downturn in the U.S. economy, and a decline in the demand for coal.

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Chart: finviz.com

Northern Tier Energy LP (NYSE:NTI)

Northern Tier Energy LP operates as an independent downstream energy company with refining, retail and pipeline operations in the United States.

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Source: company presentation

Northern Tier Energy has a very low trailing P/E of 7.47 and a very low forward P/E of 5.49. The PEG ratio is extremely low at 0.16, and the average annual earnings growth estimates for the next five years is exceptionally high at 47%. The price-to-sales ratio is very low 0.41, and the price to free cash flow is very low at 7.88. The forward annual dividend yield is very high at 12.95%, and the payout ratio is at 97%.

On August 29, Northern Tier Energy reported its second-quarter financial results. EPS came in at $0.39, $0.08 below expectations. Net income was $63.9 million compared to $245.6 million for the second quarter of 2012 and Adjusted EBITDA for the second quarter of 2013 was $85.9 million, a decrease of $160.4 million compared to $246.3 million for the second quarter of 2012. These decreases were driven by a 32% decline in refinery throughput due to planned turnaround activities that resulted in a full plant shutdown for part of the quarter. Tightened crude oil price differentials also contributed to the decrease in Adjusted EBITDA. See the table below for a full reconciliation of non-GAAP performance measures.

Cash Distribution

With this quarter's announced distribution, the company will have paid cumulative cash distributions to its unitholders of $4.66 per unit, which amounts to $429 million in the aggregate, since its IPO in July 2012.

Northern Tier Energy has very strong earnings growth prospects, and considering its compelling valuation metrics, Northern Tier Energy stock can move higher. Furthermore, the very rich dividend represents gratifying income.

Risks to the expected capital gain and to the dividend payment include a downturn in the U.S. economy, lower crude oil price differentials and the company's debt of $282 million.

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Chart: finviz.com

VOC Energy Trust (NYSE:VOC)

VOC Energy Trust acquires and holds interests in the net proceeds from production of interests in oil and natural gas properties in the states of Kansas and Texas.

VOC Energy Trust has no debt at all, and it has a very low trailing P/E of 8.64 and a very low forward P/E of 6.44. The forward annual dividend yield is very high at 10.54%, and the payout ratio is at 91%.

The VOC stock price is 1.00% above its 50-day simple moving average and 16.71% above its 200-day simple moving average. That indicates a mid-term and long-term uptrend.

VOC Energy Trust's margins have been much better than that of the industry median, the sector median and the S&P 500 median, as shown in the table below.

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Source: Portfolio123

VOC Energy Trust will report its latest quarterly financial results in November. VOC is expected to post a profit of $0.51 a share, an 11% rise from the company's actual earnings for the same quarter a year ago.

VOC Energy Trust has compelling valuation metrics and considering the fact that the stock is in an uptrend, VOC stock has room to go up. Furthermore, the very rich dividend represents a gratifying income.

Risks to the expected capital gain and to the dividend payment include a downturn in the U.S. economy, and a decline in the price of oil and natural gas.

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Chart: finviz.com

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.