Dividends4Life: Guaranteed Fat Dividend

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Guaranteed Fat Dividend

Posted by D4L | Friday, May 13, 2011 | | 0 comments »

Investors can make big money from unknown and misunderstood companies. Recently, I found a spinoff whose fat dividend is "guaranteed" for the next four years. The large dividend and the fact that the company is a spinoff have me excited that this stock could produce huge returns over the years ahead.

The stock is SandRidge Mississippian Trust I (SDT), a royalty trust that was spun off from SandRidge Energy (SD). Royalty trusts entitle unit holders (shares in publicly traded partnerships are called units) to profits from specific mineral properties. Like master limited partnerships, or MLPs, they are taxed differently from normal corporations and have some tax advantages for long-term shareholders. A key difference, however, is that royalty trusts represent a share of proceeds of a depleting asset. There's only so much oil in a given area that can be profitably drilled.

Source: Motley Fool

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