Investing 102

[Woody]

Originally Posted by solarguy09

Yes, ask Greg about Oil Royalty Trusts.. BPT, and PBT, have been some of my holdings.. Most of mine are dividend paying assets..BPT is an 8 % dividend with a 50% plus rise in 3 and 5 year chart. The total return was 107% to 167%.
3, and 5 year PBT is a 6 % dividend, with a 30 % and 45% rise in 3 and 5 year charts.

I am just asking.



although the gains are stellar, i am looking at the dividends...well both, but i am after income stream.

One of the things that would concern me is that the performance is obviously tied to the price of crude oil. Take a look at a crude oil chart.


http://futures.tradingcharts.com/chart/CO/M

The charts of BPT and PBT are highly correlated. If you look at the dividends, during the declines in crude oil prices you will see the dividends declining as fast as the price of crude. While they currently pay a high dividend, I would not expect that to continue if the price of crude declined.

These look much riskier to me than most of the other stocks we have been discussing.

[Bucketlist2012]

Originally Posted by Woody

One of the things that would concern me is that the performance is obviously tied to the price of crude oil. Take a look at a crude oil chart.


http://futures.tradingcharts.com/chart/CO/M

The charts of BPT and PBT are highly correlated. If you look at the dividends, during the declines in crude oil prices you will see the dividends declining as fast as the price of crude. While they currently pay a high dividend, I would not expect that to continue if the price of crude declined.

These look much riskier to me than most of the other stocks we have been discussing.

Good point..that is why I have been more of a listener than a poster..

I do not want to cloud the Investing 102 thread at all..Thanks for your input..

[bdahlg68]

MVO correlates to oil just like those two stocks and the Dow. Obviously lots of other factors affect share price, not just oil price. MVO has done pretty well considering. Connection to a certain commodity or region or ... is something really to be considered before investing in a stock. Just make sure you consider more than one outside influence on stock price!

[Woody]

Originally Posted by bdahlg68

MVO correlates to oil just like those two stocks and the Dow. Obviously lots of other factors affect share price, not just oil price. MVO has done pretty well considering. Connection to a certain commodity or region or ... is something really to be considered before investing in a stock. Just make sure you consider more than one outside influence on stock price!

Agreed. In fact these stocks seem to have more risk than just being tied to the price of oil.

I would just hate to see someone think they are getting a safe dividend payer and put a significant portion of your portfolio into those stocks. I think they could be a small percentage of one's portfolio to help boost your overall returns, though.

Also, I am by no means an expert, so I am just throwing my two cents in for what it may be worth.

[Bucketlist2012]

Originally Posted by Woody

Agreed. In fact these stocks seem to have more risk than just being tied to the price of oil.

I would just hate to see someone think they are getting a safe dividend payer and put a significant portion of your portfolio into those stocks. I think they could be a small percentage of one's portfolio to help boost your overall returns, though.

Also, I am by no means an expert, so I am just throwing my two cents in for what it may be worth.

Good call. In reality, it is a small portion of my portfolio. i will have to be more clear when i mention things..

Just like I won't talk about other investments I am doing...not really the nuts and bolts of Investing 102..