BP Prudhoe Bay: On the Cheap?

05/04/2017 2:50 am EST


Briton Ryle

Editor, The Wealth Advisory

BP Prudhoe Bay Royalty Trust (BPT) is making its debut on our Top 10 recommended buy list, says Brit Ryle, editor of The Wealth Advisory.

After the terrible hit shares took a couple of months back, that may surprise some. But there’s ample reason to think those prices were just an opportunity to buy in cheap.

I’m convinced that next year, management is going to extend its reserve forecast back out into the 2020s. And we’re going to keep getting royalty payments for much longer than all those sellers thought.

Plus, as the price of oil rises, not only do the reserves grow, but so do the payments. And the share price climbs along with them.

There have been several cases in the recent past where dividends climbed and the share price doubled. In fact, BPT had one of the best 10-year gains in history not long ago. It turned every $10,000 invested into over $220,000. And it paid investors nearly $19,000 a year in royalties.

At these prices, we can expect to collect more in dividends than we’re paying for the shares. And we can expect some serious share price growth as the rest of the market catches on. There’s upside here to $35.

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