BP Prudhoe Bay Royalty Trust: Royalty Generator Extraordinaire

Posted Mar 26th 2010 2:50PM by Joseph Lazzaro
Filed under: Stocks to Buy

With the Dow's rally showing signs of 'running on fumes' and with much riding on the status of the U.S. job market, it's understandable that at least some investors are approaching new capital deployment will caution.

And what's a decent play for low-risk investors and others those who are taking a wait-and-see stance toward the broader market? BP Prudhoe Bay Royalty Trust (BPT).

The trust distributes quarterly royalties on 16.4% of the first 90,000 bpd of average daily production from BP's share of the Prudhoe Bay oil field.

The current annual royalty/dividend: a whopping $14.45 per share, good for a 16.99% yield. BPT rose 12 cents to $93.90 in Friday afternoon trading.

Don't look for an outsized capital gain with BPT. I place it in the dividend generator category, which makes BPT an appropriate holding to park funds and for those who are risk-averse.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: BP Prudhoe Bay Royalty Trust, BPT