A royalty machine with no debt and a rising regular dividend — graded warn only because the yield is under 1%. Texas Pacific Land pays a $0.60 quarterly regular dividend, $2.40 annualized, raised 12.5% in February 2026 from $0.5333. Dividends paid of $100 million are 24% of 2025 operating cash flow of $418 million, a pass, and the company carries no borrowings, a pass. The regular rate has risen every year in the record shown and no regular cut appears; variable special dividends are excluded from every figure here. The single caution is the 0.68% trailing regular yield, under the 1% income line, so the card grades warn as a growth holding.
Key risk: Revenue follows Permian drilling and commodity prices, so a drilling slowdown cuts the royalties that fund the dividend even though the company itself spends almost nothing.
Changes if: The trailing regular yield rises above 1%, or operating cash flow falls enough that the regular payout crosses 60%.
- ✓Cash-flow cover 24% of FY2025 operating cash flow, pass (<60%); regular dividends only.
- ✓Leverage No borrowings and $370m cash, pass (<3x).
- ✓Dividend history Regular rate raised in 2023, 2024, 2025 and February 2026 on a split-adjusted basis; no regular cut in the record shown. Specials vary and are excluded.
- !Yield / trap review Trailing regular yield 0.68%, under the 1% line: a growth holding, not income. No trap pattern.
What this grade doesn't say: It screens the dividend only — covered, real, compounding. It says nothing about valuation or price: a well-covered payer can still be overpriced, and its price can still fall.