The Time Is Now for 2 Natural Gas Picks

Focus: INCOME

Doug Fabian Image Doug Fabian Editor, Successful ETF Investing, ETF Trader's Edge, Weekly ETF Report, and ETFU.com

This is a great time to get in on incredibly low natural gas prices and buy great gas firms cheap, writes Doug Fabian of High Monthly Income.

In the latest issue of the newsletter, I told you to get ready for natural gas. Well, today we are lighting up the pilot and turning up the BTUs in the High Monthly Income portfolio with two natural gas trusts.

In case you haven’t had a chance to review our discussion on the natural gas market, here’s a brief review...
 
Thanks to a warmer than average winter this year, demand for natural gas hasn’t been very robust. Combine that situation with a huge supply of natural gas, thanks to better discovery technologies and new extraction methods, and you have a classic combination of a decreased demand and an increased supply.

The result is a steep decline in the value per million BTUs. Rock-bottom natural gas prices mean that companies that produce and sell natural gas have had a tough go of it lately. This tough business climate is where I see the opportunity for us in this service.
 
You see, many natural gas producers are set up as royalty trusts, or pass-through securities, meaning that they funnel their profits to shareholders via high dividends. With these funds coming under pressure due to adverse price fundamentals, the falling share price of these funds translates into big yields.
 
Our thesis here is that taking positions in natural gas trusts that have been hurt by falling prices and that still are offering big dividend yields is a fantastic, low-risk buying opportunity.