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Vanguard Natural: High yield buy


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by Mark Skousen, editor High-Income Alert

Mark SkousenVanguard Natural Resources (VNR) has nothing to do with the mutual fund giant. Based in Houston, Vanguard Natural Resources owns and operates oil and natural gas reserves.

Its primary objective is to generate stable cash flows to distribute to shareholders and, over time, to increase cash distributions through the acquisition of new properties.

The firm's reserves are located in the Permian Basin in West Texas and New Mexico, the Big Horn Basin in Wyoming and Montana, the Williston Basin in North Dakota and Montana, and the Arkoma Basin in Arkansas and Oklahoma.


The company has 1,459 productive wells and 71.9 million barrels of proven reserves of oil. It also engages in an actively managed hedging program both to mitigate commodity price risk and to lock in the accretive cash flows from acquisitions.

How has the company done? Since its initial public offering (IPO) less than five years ago, Vanguard has grown its proven reserves of oil and natural gas more than 1,177%.

Other financial metrics look good, too. Earnings in the most recent quarter jumped 225%. Operating margins are 68%.

Management is earning a healthy 21% return on equity. And the stock currently yields 8.5%, with dividends paid monthly.

This performance certainly has caught the attention of corporate insider Britt Pence. Last week, Pence invested $136,600 in the stock himself. You should follow his lead.

Learn about this financial newsletter at Mark Skousen's High-Income Alert.

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