The energy sector has underperformed in 2024, driven by supply management issues and broader macroeconomic weakness. The sector is showing signs of recovery, with 2025 oil prices expected to range between $70 and $90 per barrel.
Here’s a summary of two energy stocks with solid dividend yields that could benefit from a potential rebound in the energy sector in 2025:
1. Vitesse Energy, Inc. (VTS)
-Industry: Oil and Gas Exploration and Production
-Market Capitalization: $724.70M
-FWD Yield: 8.56% (91% above the sector median)
-Sector Ranking: 37th out of 235y
-Industry Ranking: 9th out of 71
-Growth & Profitability: VTS has delivered strong growth, with a 41% year-over-year increase in EBITDA and an operating cash flow of 3.21%. It maintains a high EBITDA margin of 74% compared to the sector’s 34%
-Dividend Safety: With a strong interest coverage ratio of 7.9x, VTS offers a safe dividend, aligning with the sector’s standards.
-Key Strategy: VTS operates as a “non-operator” and uses its proprietary system, Luminis, to acquire and manage undervalued oil and gas assets efficiently.
Data source: ON Semiconductor. Chart by author.
2.Permian Resources Corporation (PR)
-Industry: Oil and Gas Exploration and Production
-Market Capitalization: $11.13B
-FWD Yield: 7.15% (more than 50% above the sector median)
-Quant Rating: Buy
-Sector Ranking: 27th out of 235
-Industry Ranking: 6th out of 71
-Growth & Profitability: PR saw impressive growth with a 37% FWD EBITDA increase and a TTM EBITDA margin of 79% (far higher than the sector’s 34%). The company has increased its well count and maintained strong operational efficiency.
-Dividend Safety: Strong growth and profitability metrics, combined with excellent dividend safety grades, suggest a sustainable and potentially growing dividend.
Conclusion:
Vitesse Energy (VTS) and Permian Resources (PR) are strong contenders for dividend-focused investors looking at the energy sector’s rebound in 2025. Both stocks offer high dividend yields, excellent dividend safety, and strong growth profiles, making them attractive choices for potential capital appreciation and steady income.
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