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High-yield stocks pay out dividends that are significantly higher than the market average. For example, the S&P 500’s current yield is only ~1.2%.

High-yield stocks can be particularly beneficial in supplementing income after retirement. A $120,000 investment in stocks with an average dividend yield of 5% creates an average of $500 a month in dividends.

Next on our list of high-dividend stocks to review is PermRock Royalty Trust (PRT).

Business Overview

PermRock Royalty Trust (PRT) is a trust established in November 2017 by Boaz Energy, a company specializing in the acquisition, development, and operation of oil and natural gas assets in the Permian Basin. The trust generates all its cash flow from the net profits of oil and gas sales from its properties and distributes dividends monthly. PRT trades with a market capitalization of $49 million and went public in May 2018.

The trust’s properties consist of long-life reserves in mature, conventional oil fields, featuring shallow, predictable decline rates. Production can be enhanced through water-flooding techniques, and new reserves may be identified in the future. The Permian Basin, spanning West Texas and southeastern New Mexico, is the most prolific oil-producing region in the U.S., historically yielding over 30 billion barrels of oil and more than 75 trillion cubic feet of natural gas.

Source: Investor Relations

On March 31, 2025, Boaz Energy sold the oil and gas properties underlying the trust to T2S Permian Acquisition II LLC. For the second quarter ending June 30, 2025, PRT reported net profits of $1.55 million, slightly below $1.66 million in the prior year period. The average realized oil price fell 16% year-over-year, while natural gas rose 8.7%. Distributable income totaled $1.20 million, down 11% from $1.35 million in the prior year, equating to $0.10 per unit versus $0.11 previously. Cash reserves remained at $1 million, unchanged from June 30, 2024, and year-to-date distributions totaled $0.3105 per unit.

Growth Prospects

PermRock Royalty Trust has faced declining production volumes since 2019, despite higher average realized oil and gas prices in 2021 and 2022. Production declined again in 2023 and 2024, reflecting the mature nature of the trust’s assets. The new owner, T2S, plans to drill one injector and one producer well in Crane County, Texas, in 2025, which could help stabilize output.

Management believes production can also be modestly increased through expanded water-flooding operations and additional well drilling, though overall growth remains limited by the properties’ maturity.

Future earnings and distributable income are highly sensitive to oil and natural gas prices, making precise forecasts challenging. Commodity price swings have historically driven volatility, such as the 2020 oil collapse and the 2022 surge amid global supply disruptions.

Assuming stable market conditions, we estimate distributable income per unit could grow roughly 6% annually through 2030, primarily driven by higher oil prices rather than significant production gains. This underscores the trust’s ability to leverage commodity cycles rather than pursue operational expansion.

Competitive Advantages & Recession Performance

PermRock Royalty Trust benefits from its ownership of long-life reserves in the Permian Basin, one of the most prolific oil-producing regions in the U.S. Its assets have shallow, predictable decline rates, and production can be enhanced through water-flooding and selective drilling.

As a royalty trust, PermRock has minimal operating expenses and does not incur exploration or development costs, allowing it to pass most of its profits directly to shareholders as monthly dividends. This structure provides a streamlined, cash-focused way to gain exposure to oil and gas production.

However, the trust is highly sensitive to commodity price fluctuations, making it vulnerable during economic downturns. For example, the dividend was suspended for five months in 2020 amid the COVID-19-driven oil glut. Conversely, during periods of rising oil prices, PermRock can deliver outsized returns and high dividend yields, often outperforming integrated energy companies. Its performance is therefore closely tied to macroeconomic and geopolitical factors that affect the oil and gas markets.

Dividend Analysis

PermRock Royalty Trust pays a variable monthly dividend based on its underlying net profits. The trust is expected to distribute $0.38 per share for 2025, yielding 9.7%. While this yield is attractive, dividends can fluctuate significantly with oil prices. During the oil market collapse of 2019–2020, PermRock suspended its dividend for five consecutive months.

The trust is highly sensitive to oil prices, offering greater upside than integrated oil companies when prices rise, as seen in the post-pandemic recovery that allowed dividend growth to resume. This makes PermRock suitable for investors confident in higher future oil prices who want exposure to the Permian Basin.

However, this leverage also carries risk: in a downturn, losses are amplified. Although PermRock’s assets are located in the prolific Permian Basin, an oil royalty trust may not be the most efficient way to benefit from production growth. Investors may achieve better risk-adjusted exposure through traditional oil and gas producers or midstream companies. The 2020 dividend suspension underscores the volatility inherent in oil and gas royalty trusts.

Final Thoughts

PermRock Royalty Trust has faced several challenges in recent years, including weak oil prices and the demand collapse caused by the COVID-19 pandemic. The trust operates in the U.S.’s most prolific oil-producing region and offers an exceptionally high dividend yield, supported by modest growth prospects.

While we do not anticipate a near-term downturn in the energy sector, the trust’s heavy reliance on oil prices and non-diversified business model makes it risky for concentrated investment. As a pure upstream player, it is inherently exposed to commodity price volatility, and its relatively short track record limits confidence in long-term dividend stability and consistency.

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