Texas Pacific Land (US:TPL) The Motley Fool·2025-04-03 08:32Company Overview - Texas Pacific Land Corporation (TPL) has seen a remarkable increase of 142.8% in stock price over the past year, significantly outperforming the S&P 500 and the energy sector [1] - TPL is one of the largest landowners in Texas, owning approximately 873,000 acres of land, which has gained substantial value due to advancements in drilling technology [4] Business Model - TPL operates a low-risk, capital-light business model, generating revenue from oil and gas royalties, water sales, easements, commercial leases, permits, and land sales, without engaging in drilling [5] - The company's profits have surged as the Permian Basin has become the largest onshore oil and gas production region in the U.S. [5] Water Business - TPL's water business has expanded significantly, achieving record sales in 2024, and operates one of the largest water production, storage, and delivery networks in the Permian [6] - In 2024, water sales and produced water royalties totaled $254.8 million, reflecting over a 30% year-over-year increase [7] Financial Performance - In 2024, TPL reported oil and gas royalties of $373.3 million, a 4.5% increase from 2023, while overall sales, operating income, and earnings have shown steady growth [7] - TPL's low operating expenses enable it to convert a large portion of revenue into net income, resulting in a high profitability level [12] Dividends - TPL began paying a regular quarterly dividend in 2021, which has grown to $1.62 per share, with additional special dividends based on performance [10] - In 2024, TPL paid a record $13.51 per share in dividends, yielding approximately 1% based on the stock price at that time [11] Valuation and Market Position - TPL's valuation has increased to 69 times trailing earnings, indicating a high price relative to earnings, which may deter some investors [12] - Despite the high valuation, TPL's business model remains strong, particularly with the growth of its water business [14]