Energy Royalty Trusts Pay High Yields

 Hugoton Royalty Trust (HGT) offers a near 8% distribution yield for the next year despite a low price for natural gas, the fast-growing, environmentally desirable fuel. Stock price is in an uptrend measured by the 200-day average and it may have further to go judging by estimated Net Present Value (NPV) of $21 a unit (see table Functional Cash Flow and Present Value). Yet natural gas, HGT’s main product, is out of favor , but will increase in price later in the year.. The fuel expected to contribute the most to energy growth languishes underappreciated at a price 40% of the heating equivalent of oil. Investors in HGT can be patient with an adjusted reserve life index of 12.3 years implying continuing production at a declining rate for at least twice as long. Recently the operator of the trust’s properties has reinvested less of the trust’s cash flow thereby allowing volume to decline naturally (see chart Natural Gas Volume and Development Spending). Money not spent for drilling has boosted distributions. The future tradeoff between volume and spending will depend on buy-recommended ExxonMobil (XOM) as it is expected to acquire XTO Energy the founder of the trust. A premium price for HGT natural gas compared to the Henry Hub reference also helps current distributions to exceed a year ago despite lower levels for the widely quoted industry price



San Juan Basin Royalty Trust /Pays  8.9 % Distribution

Sabine Royalty Trust/ Pays 5.9% Distribution

Permian Basin Royalty Trust/ Pays 8.75 % Distribution

How can you go wrong with Solid Royalty Trust as these, with a product that will be in demand for years to come. Like all investments, research before you buy.