New
This Under-the-radar S&p 500 Stock Turned £10,000 Into £283,500 In 10 Years
One of the best-performing stocks in the S&P 500 over the last decade is Nvidia. The surge in demand for artificial intelligence (AI) chips has propelled the business to enormous heights that have made shareholders exceptionally wealthy.
However, while Nvidia often steals the headlines, the S&P 500’s been home to a wide range of businesses offering jaw-dropping returns. And one business that often gets overlooked is Texas Pacific Land Corporation (NYSE:TPL).
Between May 2015 and 2025, Texasâ largest landowner has enjoyed a substantial explosion in income thatâs pushed its share price up drastically. And when combined with dividends paid along the way, shareholders have reaped a massive 2,734% return. To put that into perspective, a £10,000 initial investment over this period would now be worth around £283,500.
But is this just the tip of the iceberg?
Achieving a 2,700%+ return
Texas Pacific Land owns around 873,000 acres of land primarily concentrated in the Permian Basin in Texas. And as a quick reminder, this is one of the most productive oil & gas regions in the entire United States. Itâs important to note that the firm doesnât actually produce any fossil fuels itself. Instead, it owns the land on which oil & gas are extracted by other companies, collecting royalties typically between one sixteenth to one eighth of the resources extracted.
Over the last 10 years, drilling activity in this region has rocketed. Subsequently, the business enjoyed a massive surge in revenues. And since it has no operating costs linked to oil & gas production, earnings promptly followed at impressive margins, exceeding 70%.
Even in the last five years, the company has seen its net income more than double from $176m to $454m. So itâs no surprise to see shares of this S&P 500 enterprise surge.
More growth on the horizon?
With President Trump repeating the words âdrill, baby, drillâ, his administration is proving to be very friendly to the oil & gas industry. Thatâs terrific news for Texas Pacific Land since higher activity on its property means more money flowing to the bottom line.
Unfortunately, rising production costs could throw a spanner into the works. Drilling operations have steadily become less economically viable over the last decade. The average production cost per barrel in the region was $46 in 2017. But in 2025, according to a survey by the Federal Reserve Bank of Dallas, that number sits between $61 and $65.
Thatâs roughly the same price point as where oil prices are currently sitting right now. And consequently, producers have started re-assessing future production in the region. Thatâs made evident when looking at the biggest extractors (Exxon Mobil, Chevron, TotalEnergies, BP, and Shell) that have all prioritised shareholder dividends in recent years rather than reinvestment in the Permian Basin.
The bottom line
Fossil fuels are a finite resource. And eventually, the Permian Basin will be depleted of its economically viable drilling sites. Some analysts fear that this could be just a few short years away which, if true, could compromise the future growth potential of this enterprise. With that in mind, this isnât a company Iâm rushing to buy in 2025.
The post This under-the-radar S&P 500 stock turned £10,000 into £283,500 in 10 years appeared first on The Motley Fool UK.
But what does the head of The Motley Foolâs investing team think?
Should you invest £1,000 in Texas Pacific Land Corporation right now?
When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Texas Pacific Land Corporation made the list?
More reading
- In the next 12 months, experts predict the Tesco share price will be…
- Prediction: 12 months from now, the HSBC share price could turn £5,000 into…
- Prediction: in the next 12 months, the Lloyds share price could climb to…
- 1 share to consider for those new to the stock market (and other investors too)
- Prediction: 1 year from now, the Rolls-Royce share price could turn £5,000 into…
Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Nvidia. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
