Evolution Petroleum: A 13% Yield Worth A Small Bet
Evolution Petroleum offers a 13% yield, primarily from non-operated working interests, but carries higher risk than royalty peers due to elevated operating costs. Despite weak FY2026 results and shareholder dilution from a Permian acquisition, EPM is rated a small BUY as capex is set to decline and new royalties should boost cash flow. Dividend coverage is tight but projected to improve, with management targeting $4–6M capex and pro forma free cash flow potentially covering the $19.3M annual dividend.