NGP Capital Resources
NGP Capital Resources (NGPC) is an interesting pick in the oil patch.
The firm doesn’t actually drill or produce energy, but provides capital — via royalty interests, senior and subordinate debt as well as equity stakes — to other smaller energy producers and midstream firms. NGPC just sits back and then collects the interest payments, dividends and royalties. No heavy lifting required.
And since it’s structured as a taxed advantaged Business Development Company (BDCs), those payments are kicked back to shareholders via a hefty 8.4% dividend yield — a scorching yield among any group of dividend stocks.
Essentially, NGPC allows regular retail investors to play the elusive world of venture capital or private equity without multi-million dollar minimum investments. On that front, NGPC’s management has been pretty successful — owning firms like Pioneer Natural Resources (PXD) or Energy Transfer Partners (ETP) before they were household names.
Ultimately, NGPC stock allows investors to participate in the earliest stage of energy production without wildcatting a well in their own backyard.