{"id":1594,"date":"2013-09-12T09:15:18","date_gmt":"2013-09-12T16:15:18","guid":{"rendered":"http:\/\/staging-prblog.paladinregistry.com\/blog\/?p=1594"},"modified":"2014-01-21T12:07:17","modified_gmt":"2014-01-21T20:07:17","slug":"benefits-of-royalty-trusts","status":"publish","type":"post","link":"https:\/\/www.paladinregistry.com\/blog\/wall-street\/benefits-of-royalty-trusts\/","title":{"rendered":"Benefits of Royalty Trusts"},"content":{"rendered":"

\"Benefits<\/a>Royalty trusts, like MLPs, generally invest in energy sector assets. Unlike the steady cash flows at MLPs, royalty trusts generate income from the production of natural resources such as coal, oil, and natural gas. These cash flows are subject to swings in commodity prices and production levels, which can cause them to be very inconsistent from year to year. The trusts have no physical operations of their own and have no management or employees. Rather, they are merely financing vehicles that are run by banks, and they trade like stocks. Other companies mine the resources and pay royalties on those resources to the trust. For example, Burlington Resources, an oil exploration and production company, is the operator for the assets that the largest U.S. royalty trust, San Juan Basin Royalty Trust (SJT), owns the royalties on.<\/p>\n

Royalty trusts end up on most investors’ radar screens because of the incredibly high yields some of them offer, many in excess of 10%.\u00a0 In a low-interest-rate environment, it’s easy to understand why such an income-producing investment might be garnering more attention. Many of the positive and negative attributes of owning a royalty trust are similar to those faced by MLP unit-holders. The benefits are:<\/p>\n