US natural gas producer's latest quarterly results underline its income attractions
Thursday 19 May 2022 Author: Tom Sieber

Diversified Energy Company (DEC) 123.9p

Gain to date: 4.1%

Original entry point: Buy at 118.8p, 31 March 2022

US natural gas producer Diversified Energy Company (DEC) has moved higher since we said to buy in March and its first quarter numbers reinforced our view that the stock is a good option for investors looking to beat inflation.

The company’s quarterly dividend at 4.25 cents per share was up 6% year-on-year. If the company simply maintained its payout at this level for the rest of the year it implies a 2022 yield of 11%. Consensus forecasts suggest the actual payments may be slightly higher for a yield of 11.6%.

This generosity to shareholders is underpinned by resilient production levels which average 134,000 barrels of oil equivalent per day, and high domestic gas prices as countries look for alternatives to Russian imports thanks to the war in Ukraine.

Diversified Energy continues to target deals to add to its output. It uses financing methods including securitisation, where it packages up its assets and sells them as securities, to avoid issuing new shares and diluting existing shareholders.

SHARES SAYS: This still looks an attractive investment. Keep buying the shares.

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