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, Texas’ largest landowner has enjoyed a substantial explosion in income that’s 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. It’s important to note that the firm doesn’t 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 it’s no surprise to see shares of this S&P 500 enterprise surge.
More growth on the horizon?
With President Trump repeating the words “drill, baby, drill”, his administration is proving to be very friendly to the oil & gas industry. That’s 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.
That’s 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. That’s 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 isn’t a company I’m rushing to buy in 2025.
