Critical Comparison: Texas Pacific Land (NYSE:TPL) & Occidental Petroleum (NYSE:OXY)

Occidental Petroleum (NYSE:OXY) and Texas Pacific Land (NYSE:TPL) are both large-cap energy companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, earnings, analyst recommendations, valuation and dividends.

Dividends

Occidental Petroleum pays an annual dividend of $1.12 per share and has a dividend yield of 2.0%. Texas Pacific Land pays an annual dividend of $2.40 per share and has a dividend yield of 0.9%. Occidental Petroleum pays out 17.3% of its earnings in the form of a dividend. Texas Pacific Land pays out 28.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Occidental Petroleum has increased its dividend for 5 consecutive years and Texas Pacific Land has increased its dividend for 3 consecutive years. Occidental Petroleum is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Occidental Petroleum and Texas Pacific Land’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Occidental Petroleum	32.17%	18.55%	7.38%
Texas Pacific Land	60.71%	36.22%	32.54%

Insider and Institutional Ownership

88.7% of Occidental Petroleum shares are held by institutional investors. Comparatively, 59.9% of Texas Pacific Land shares are held by institutional investors. 0.5% of Occidental Petroleum shares are held by insiders. Comparatively, 0.3% of Texas Pacific Land shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk & Volatility

Occidental Petroleum has a beta of 0.16, meaning that its share price is 84% less volatile than the S&P 500. Comparatively, Texas Pacific Land has a beta of 0.58, meaning that its share price is 42% less volatile than the S&P 500.

Valuation & Earnings

This table compares Occidental Petroleum and Texas Pacific Land”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Occidental Petroleum	$22.07 billion	2.59	$2.33 billion	$6.46	8.87
Texas Pacific Land	$798.19 million	24.36	$481.38 million	$8.51	33.13

Occidental Petroleum has higher revenue and earnings than Texas Pacific Land. Occidental Petroleum is trading at a lower price-to-earnings ratio than Texas Pacific Land, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings for Occidental Petroleum and Texas Pacific Land, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Occidental Petroleum	0	15	12	0	2.44
Texas Pacific Land	0	1	2	0	2.67

Occidental Petroleum presently has a consensus price target of $67.62, indicating a potential upside of 18.06%. Texas Pacific Land has a consensus price target of $639.00, indicating a potential upside of 126.64%. Given Texas Pacific Land’s stronger consensus rating and higher possible upside, analysts clearly believe Texas Pacific Land is more favorable than Occidental Petroleum.

Summary

Texas Pacific Land beats Occidental Petroleum on 9 of the 17 factors compared between the two stocks.

About Occidental Petroleum

Occidental Petroleum Corporation is an energy and chemicals company headquartered in Houston, Texas. Its oil and gas business explores for and produces crude oil, natural gas liquids and natural gas, with operations in the United States and international markets, including the Middle East and North Africa. Through its OxyChem business, Occidental manufactures and markets basic chemicals and vinyl products used in applications such as water treatment, construction and consumer goods. The company also develops carbon management and lower-carbon technology projects, including carbon capture and storage.

About Texas Pacific Land

Texas Pacific Land Corporation is a land and resource management company focused on properties in West Texas, particularly the Permian Basin. Its roots date to the Texas and Pacific Railway, and the company’s land holdings were historically managed through the Texas Pacific Land Trust before it became a corporation. The company earns revenue from oil and natural gas royalties and from activities tied to its surface and mineral interests. Its land and resource management operations include leasing land, granting easements and rights-of-way, and supporting energy development and other land uses.