5 Royalty Trusts to Buy for Massive Cash Flow
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- čas přidán 18. 07. 2021
- I love dividends but with stock prices up so much, dividend yields have fallen hard. There is a solution though, one that combines my favorite sector right now with a high dividend yield. See how royalty trust stocks can produce a dividend yield twice the market average and give you a special tax break for higher returns.
Royalty Trusts are special types of companies set up to hold an income producing asset and then pass all that income on to investors. These companies usually buy assets like an oil field or a gold or copper mine. The exploration company gets a one-time payment for a percentage share of the production. The company continues to manage the asset, so drilling for oil on the fields or mining the gold reserves. Royalty trusts have no employees, it’s just a financial account that receives the percentage share from the exploration company and passes it on to investors.
Pros of royalty trust stocks are the higher diviend yield, more than twice the average dividend you get from stocks. You also get nearly all of that dividend tax-free when you collect it. Royalty trusts aren't taxed the same way as other dividend stocks. You pay taxes when you sell the shares instead of every year on the dividends you collect. That's a big tax savings and one most investors don't understand.
Another upside is that because royalty trusts are a special type of company, they don't pay corporate taxes. They also don't have employees or operating costs. It's a very efficient way of managing assets and means you get as much cash flow as possible.
Of course, there are also downsides to royalty trusts. They are limited life investments. The trust doesn't add assets so once the oil field or mine stops producing, that's it. If dividends from production fall low enough, either the producer buys back the shares or the trust manager liquidates the assets and sends a check to investors to close the company.
Another drawback to trusts is the dividends can be extremely volatile. Cash flow is completely dependent on production and commodity prices. That's been great this year with surging prices and most royalty trusts have increased their dividend payouts. It works the other way too though. If prices for things like oil, gold, steel and uranium fall then the royalty trust stocks I mentioned in this video could see lower dividend payouts.
In this list of royalty trust stocks, I tried to diversify the assets so it’s not all dependent on prices for one commodity. I included a gold trust, steel, oil and even a uranium trust. That way, you benefit from rising commodity prices rather than betting on just one type of trust. I also looked for royalty trusts with strong balance sheets and good dividend growth.
Check out the investor presentation for Gold Realty Corp, a cash flow business model with royalties on some solid gold assets. www.goldroyalty.com/_resource...
www.goldroyalty.com/company/
NYSE American: GROY
Check out the investor presentation for United Royalty Corp, the first company to apply the royalty structure to uranium assets. Investor Presentation: www.uraniumroyalty.com/invest...
TSX: URC | Nasdaq: UROY
This video was conducted on behalf of Gold Royalty Corp, and was funded by Gold Standard Media LLC. All research, recommendations and opinion is that of the creator and no content was written or provided to the channel from the company. Sponsorships like these help me provide free research into this and other companies for investors. For our full disclaimer, please visit: www.goldstandardir.com/gold-r...
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Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through debt payoff strategies, investing and ways to save more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps.
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What was the dividend percentage for GROY?
The only thing I dislike about this man's channel is that he doesn't post 10 videos per day
You never cease to amaze me on how many great topics you come up with daily with in depth insight into each subject. Kudos, sir!
Always glad to help. Thank you for being a part of the community.
@@josephhogue can you do a series on taxes centered around someone who is heavy invested in stocks.
Glad that I ran across you!...this is a huge awakening to building my wealth! Thanks!.
Thank you for all the good info! Keep those great videos coming.
Obrigada pelo conteúdo!!! Amando seu trabalho
I checked Permian Basin Royalty and impressed. Wish had seen this video 2 years ago. Its up 620% then 4.2% Dividend yield.
Your knowledge in this subject just blows my mind , do you have a podcast? If not you should start one I could listen to you i love the content!
Great Vid but I'm not finding the div on GROY and Uroy anywhere?
Great video. I will definitely look to put some trusts in my portfolio. In the same time, it is important though to do your due dilligence before buying, as changes might come up. This is from SEC Filing of Mesabi, April '22: "Cliffs’ announced intentions to shift DR-grade pellet production away from Northshore, use Northshore as a swing operation and idle Northshore operations from time to time, including from Spring to at least Fall of 2022 (which commenced May 1, 2022), will, if and when each is implemented, reduce royalty income and, in turn, will reduce or potentially eliminate, funds available for distribution to unit holders."
Another line from the report: "Because we are now able to produce DR-grade pellets at Minorca, and mainly due to the ridiculous royalty structure we have in place with the Mesabi Trust, we will be idling all production at our Northshore mine, starting in the Spring, carrying through at least to the Fall period, and maybe beyond"
have you ever thought of creating a video of stocks you would avoid like a plague?
Great idea!
He might make some enemies. lol
Thank you.
Why when I enter GROY do I get AMEX and not NYSE as shown in your video?
Love your channel.
This was great. Thx
Could you please share your thoughts on some stocks for Olympics 2022 in China? Thanks in advance.
Do you know if there would be any royalty trust that deal with renewable energy?
What do you think of Hugoton Royalty
Why is it when I look at The uranium stock on Robinhood it doesn’t have a dividend yield it’s blank. Even tho it’s blank can I still earn royalties for each share I own?
Love it
Given the lifespan of the royalties that would explain why the first two of these trusts that you present are depreciating in value over time.
These seem a bit higher on the risky side for my taste, and I'm guessing these would make sense if you had a sizable chunk of cash to buy in rather than buy in on a lower, monthly scale?
Does anyone know if there’s a royalty trust ETF?
GROY is a grab at current pricing (~$4.90). Happily holding for the long term.
$2.68 8 months later...
Wow it is down to $2.48 sorry for your loss, :-(
Sponge Bob 1 year later....😢
Late to seeing this video. A long-term question for this type of investment. Using the example from your video, if you buy for $5 and get $2 back your first year your cost basis is now $3. If you hold this long enough that your cost basis is zero, how is further income taxed since you essentially have no capital to return?
Hey Joe, got a view on PK?
Foreign tax withheld?
Thanks so much Joe, I’m all over it
Always glad to help Susan. Thank you for being a part of the community.
Can Royalty Trusts be held in retirement accounts such as ROTH and/or IRA?
They can but it's best to hold them in a regular account. Some of the dividend is taxed as a return of capital (you don't pay taxes when received but when you sell the stock) that means you benefit more in a taxable account
Your last trust company seems very interesting, might throw in a few $$.
Okay......
Can you do an analysis on why these royalty trusts are down so much right now?
Turbotax makes it a royal pain in the butt to put the royalties on your taxes.
@@everetteborr
Yeah, I think pulled like $25 from royalties last year, but turbo tax made me upgrade to $30 to file it. It was so complicated that I sold my stock in royalty trusts this year to avoid that
How can a no profit invest & get to pay dividends?
Too bad your question was ignored
U talk to too fast so i can't gett ticker symble but realy appreciate u r time
Thank you. Trying to get a lot of info in without making the video too long. Thanks for the feedback.
I always pause the video when the ticker symbol appears on screen.
Uso?
Should be support for oil around $65 a barrel but USO doesn't track well sometimes. Good short-term potential though.
Today literally zero reason to be in Royalties in 2023 when you can invest in either zero risk treasuries at >5% or in investment grade corporates at 6-7%+. Go just slightly further out on risk curve and you can get around 9-10%. Nothing here can even come close in terms of risk:reward.
1 year later, GROY is down to $2.15, from $5.38 shown in this video. I'm in but I'm down.....And both PBT and SBR have risen significantly!!
Been loving the energy trusts but oil might not play along the same this year. My GROY is down as well. CEO knows his stuff and I think it's only a matter of time
What platforms do you use when buying these stocks? I can’t find some on the one i use for my dividend stocks
+Guildence
+14158257651
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@@whatsap8686 scammer
Would love to invest in these but Robinhood sucks 🤬
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MSB also cut its dividend last week from .89 to .09.....ouch
yes but that has happened several times over its lifetime, the next payout could and most likely will be much higher for the next quarter
@@jwrcolombia yeah so true. I have been doing the dividend capture strategy this year. its been great, on track to add $40k in dividends to my Roth the be EOY if things go right :-)
@@johnb1571 I started with a grand and every day I am putting 50.00 into my account with M1 finance. I currently have a mixture of monthly paying and quarterly paying. So far I hold PSEC, T, QYLD, GOOD, JEPI, MO, and EPD. I am looking to add a couple more then I should be good to just build and let it keep flipping! I am excited. I live in Colombia also like Joe.
@@jwrcolombia nice we love MO, sin pays well lol
@@johnb1571 I dont think theres too much growth in it to the decline of cigarettes but if Juul and vaping still keep going up and Altria gets a bigger stake then growth could be there….honestly i am in this for monthly pay so i dont worry about stock pricing going up
What your thoughts on TTCF?
They’re an incredible young company poised for tons of growth.
It looks delisted
Are you serious about investing in a trust for Shell gas? I'm not speaking of the company.
Sometimes I feel like the planet Earth is a ball of juice and all we do is suck it dry to sustain our easy lifestyles.
Today's accomplishments were yesterday's impossibilities.
Royalty trusts are horrible stocks or so that I have learned. SJT, PBT, etc. their dividends are everywhere and they will cut them from time to time. Never doing that again.
SBR up 30$ sense this video, 9.3 PE and about .70 a share dividend that pays every month. What do you think about FRT? Is that one worth holding? Dividend history looks ok. Thanks!!