27 responses

  1. Robert @ The College Investor
    December 27, 2010

    Great call! RT’s are great. If you are looking for something like this, MLP (Master Limited Partnerships) are good as well!

  2. moneycone
    December 27, 2010

    @Robert: Absolutely! MLPs are part of this series!

  3. Jessica07
    December 27, 2010

    Great post, Money Cone! I think RT’s are too often overlooked, and therefore become a great untapped investment resource.

  4. MoneyCone
    December 27, 2010

    @Jessica: Very true! The tax part scares most, but the returns are worth the effort. I never thought a RT would be one of my best performing stocks for 2010!

  5. Money Reasons
    December 27, 2010

    I have to admit, I’ve check this Royal Trust more than one. I didn’t know that it wasn’t a stock though!

    I’m a bit intimidated by the tax differences that you identified above.

    But other than that, it sounds and looks great!

  6. Aloysa
    December 27, 2010

    Loved your post! I usually just brushed over RT and never paid a lot of attention to it. Now, I might take a closer look.

  7. BeatingTheIndex
    December 27, 2010

    That is some nice return, I am glad you are invested in this one. I love them dividends especially when they’re paid on a monthly basis!

    That will be one of my objectives for 2011, increase the monthly dividends!

  8. retirebyforty
    December 27, 2010

    Wow, pretty cool. I don’t know much about RT, but will keep that as an option now that I’m moving my portfolio toward yield in the next few years.

  9. The Biz of Life
    December 27, 2010

    Any ETFs available in this sector to spread the risk out?

  10. moneycone
    December 27, 2010

    @Money Reasons: You should definitely check out RTs …most tax software can handle RTs if you are concerned.

    @Aloysa: Thanks! Give RTs a thought. They are great way to add income to your portfolio.

    @BeatingTheIndex: To be fair, that wasn’t *my* return – just one year returns on BPT. Mine was less than that, but still pretty high. Some RTs do provide monthly dividends. I hold PVX, but then it is Canadian and there is the withholding tax on it plus the laws are changing coming year.

    @retirebyforty: Definitely research this area.

  11. moneycone
    December 27, 2010

    @Biz of Life: You bring up a good point! There are ETFs that specialize in canadian RTs (ENY comes to my mind) but none as far as I know that specialize in pure US RTs.

  12. Squirrelers
    December 27, 2010

    Moneycone – this is a really interesting post. I haven’t spent time looking at this investment vehicle, so this was a good primer. As with anything, I would say that there’s no such thing as something for nothing. That said, even though there appear to be real risks here, those total returns seem really impressive. Thanks for sharing this!

  13. Moneycone
    December 27, 2010

    @Squirrelers: You are absolutely right – nothing is without risks. Due diligence should always be practiced. But it is good to be aware of the options! One shouldn’t invest in RTs expecting share price appreciation in the long run!

    Glad the post helps.

  14. Clay Ivy
    December 28, 2010

    Investing for income is a great way to increase return.

  15. Everyday Tips
    December 28, 2010

    You know what, I didn’t really think about Royalty Trusts when I was contemplating my saving allocations for next year. I am really glad I came across this post- I am going to look into them further.

    Thanks Moneycone!

  16. Barb Friedberg
    December 29, 2010

    Interesting article. Have invested in the past in a variety of MLP’s. You must understand that after 100%+ appreciation, consider the volatility of commodities, principle depreciation will wipe out the advantage of the fat dividend. Proceed with eyes open.

  17. First Gen American
    December 30, 2010

    I knew nothing about royalty trusts, so I appreciate the intro. I am looking forward to your unconventional investment series.

  18. moneycone
    December 30, 2010

    @First Gen American: You are welcome!
    @Barb: Oh yes Barb. This is not a capital appreciation stock!

  19. DIY Investor
    January 2, 2011

    Interesting post. I would put 5% of investable assets in this sector and agree with Barb “…proceed with eyes open”. It would probably not be that difficult to hedge these with say a few (far out of the money) puts .
    As a matter of background I went to work for a wealth management firm a few years ago that had its fixed income portion of assets tied up in high yielding trust preferreds – mostly bank issues. They were hitting the ball out of the park and high fives around the office were pretty common. Then 2008 came along. Check a price graph on Royal Bank of Scotland trust preferreds to get the rest of the story.

  20. ForexTrader
    January 11, 2011

    The Royalty Trusts seem to be really interesting as far as I can see from the charts. Good that I have found your post.
    Keep up the good work.
    Cheers

  21. Untemplater
    February 18, 2013

    Intriguing! I haven’t read much about royalty trusts before, so this is helpful to know. Interesting too that they will shut down eventually. Thanks MC.

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