Thursday, September 15, 2011

Type of Investments: 4 - Royalty Land Trusts

Royalty Land Trusts. They aren't often talked about in the dividend growth world but they do offer some nice current yield...

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.

In the video I paint a picture that these things run out of their natural resource and an investor loses all their money quickly. The lifespan of these trusts are measured in decades when they start up. The drop off in the dividend paid out because of rising costs takes years to occur. There is plenty of time to monitor and get out in time. The trick is not to be greedy. Not to get every last bit of payment because you don't want to be holding the bag.

Something else to consider. The dividends are 100% based upon the current going rate of the natural resource sells for. When oil rises trusts like BPT will pay out more in their next dividend. If natural gas falls then trusts like HGT will have a lower payment.  From an inflation point of view this can help pay for your personal bills. Buy up enough oil trust shares to cover the rising cost of gasoline in the summer time. Do the same for a natural gas trust to cover your winter heating bill. If these natural resource prices fall then yes you will get a smaller dividend however you will have a lower bill to pay for when you are living off of these also.

Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others.
I am not a financial planner, financial adviser, accountant, or tax advisor. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets

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