BPT shares have soared to about $126 from $105 in the past three months -- a gain that would tempt some to take profits. Even so, this dividend play extraordinaire is worth retaining, for royalty reasons.
The trust distributes royalties on 16.4% of the first 90,000 barrels per day (bpd) of average daily production per quarter from BP's share of the Prudhoe Bay oil field.
The current annual dividend is $9.99 per share, good for an impressive 12.8% yield at the current trust price. BPT fell $1.30 to $126.19 in mid-day Thursday trading.
The past three months notwithstanding, investors should not expect an outsized capital gain with BPT: a 5% to 7% annual stock appreciation is the realistic forecast, but shares could just as easily retreat 5% during that period. BPT is a decidedly dividend-based play, hence don't consider BPT if your emphasis is capital gain.
BPT's 1-year stock range is $79.56 to $131.49, and the 5-year stock range is $50 to $131.49.
Stock Analysis: I consider BP Prudhoe Bay Royalty Trust to be a low-risk stock. Consider BPT if you're looking primarily for a dividend, not a capital gain. I'd put a sell/stop loss at $45.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.