PDC Energy has been one of the small cap marvels this year, rising over 120% in 2021 and feeding into gains for the Invesco S&P SmallCap Energy ETF (PSCE ).
At about a 9% allocation, the stock is the fund’s largest holding. As described on its website, PDC Energy “is an independent oil and gas company focused on maintaining a strong balance sheet and solid debt metrics while delivering value-added organic growth from a liquids-rich portfolio through horizontal drilling.”
The oil and gas industry has rebounded this year after a dismal 2020 that saw oil prices hit below $0. Things have turned around in a big way and the energy rally has sustained itself for much of 2021.
PDC Energy has been doing so well that the company recently announced the firm’s first quarterly cash dividend declaration.
“We are excited to begin a new era for PDC and its shareholders,” said Bart Brookman, President and CEO. “We welcome the opportunity to return cash to shareholders and believe our continued focus on debt reduction and share repurchases should position us to sustainably grow our dividend over time.”
Small Cap Strength with an Energy Boost
PDC Energy’s good fortune is also translating into gains for PSCE. The fund is up over 80% on the year.
As for the ETF, PSCE seeks to track the investment results of the S&P SmallCap 600® Capped Energy Index. The fund generally will invest at least 90% of its total assets in the securities of small-capitalization U.S. energy companies that comprise the underlying index.
These companies are principally engaged in the business of producing, distributing, or servicing energy-related products, including oil and gas exploration and production, refining, oil services, and pipelines. The fund’s expense ratio comes in at 0.29%, which is a relative bargain given its category average of 0.47%.
PSCE is also benefiting from a focus on renewable energy, which is further propelling the sector as the world moves to reduce its overall carbon footprint.
“This ETF tracks an index that is comprised of common stocks of U.S. energy companies that are principally engaged in the business of producing, distributing or servicing energy related products, including oil and gas exploration and production, refining, oil services, pipeline, and solar, wind and other non-oil based energy,” an ETF Database analysis said.
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