Dividend Hunter stock Sitio Royalties Corp. (STR) provides direct exposure to prices of energy commodities (crude oil, natural gas, natural gas liquids). Picking up shares near the current mid-$20s prices could easily look like a very good move a year or more in the future, notes Tim Plaehn, editor of The Dividend Hunter.
At STR, 2022 fourth quarter production was 51 percent crude oil and 49% the two gas commodities. During the quarter, Sitio earned $81.84 per barrel of oil and $57.48 per barrel of oil equivalent, which includes revenue from all three commodities.
During most of the first quarter, crude oil traded in a range of $75 to $80. In mid-March, oil dropped to around $65 before recovering to over $80, and recently sold for around $82.50 per barrel.
Natural gas started the year at $4.44 per Mcf (STR earned $4.33 in Q4) and dropped steadily to around $2.00 per Mcf. Gas recently traded for $2.11.
The STR share price is down 8% from where it closed out in 2022. I expect the first quarter dividend from STR to be less than the $0.60 paid at the end of March.
However, longer term supply and demand forces point towards higher energy prices, driving the STR share price higher.
Recommended Action: Buy STR up to $30.
