Natural Resource Partners (NRP) is pitched as a mispriced, capital-light royalty company with a near-term catalyst: a dramatic increase in dividend payouts beginning in 2026. Unlike coal miners, NRP owns 13 million acres of mineral rights and collects high-margin royalties from lessees. With 20 years of consistent free cash flow and average 94% FCF margins, it has no operating leverage or capital risk. The business model benefits from inflation and requires minimal overhead. Importantly, it also owns valuable assets beyond coal—including a 49% stake in soda ash producer Sisecam Wyoming and optionality in carbon sequestration royalties leased to ExxonMobil and Occidental.
The investment thesis hinges on a completed decade-long deleveraging effort. With all debt and preferred equity expected to be eliminated by 2025, management has stated it will distribute 100% of free cash flow starting in 2026, translating to an ~18% yield at current prices. Management and directors own nearly 29% of the company, with the CEO forgoing a salary. Even if the stock does not re-rate to reflect this income stream, the 18% dividend allows investors to compound returns through reinvestment. If it does re-rate to a 10–11% yield, it implies 75% upside on top of the income stream.
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