Royalty Trusts are one of the worst ways to supplement Social Security

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The income from a royalty trust like BP Prudhoe Bay Royalty Trust, SandRidge Mississippian Trust I or SandRidge Mississippian Trust II fluctuate, making these one of the worst ways you could supplement Social Security.

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  • https://www.flickr.com/photos/glenbledsoe/6304555646/in/photolist-9qRF8r-6QFDYU-4BfaUm-7987Vs-bH1eiH-bH1gac-62QVb5-62LD8Z-6hSkjK-9htwN2-5KQyH9-chEaLb-4sUYDb-aB7uKh-9PSLHY-fKKcRD-bxDiow-ght8m7-dSXXyh-9VADkr-9gYtwj-cEHZc1-jKTQdK-bi1bhM-9qREU2-5WEQZB-8ip71R-4e5gDL-9KU6T1-8ip6YF-8ddtDt-8PWifN-bZwdFC-9kNSHL-9kMUQb-4e1gT8-oh2EL-fEHuLF-5yL49b-5WsjQv-a32GWs-chEfau-9qUEUf-9qUDuJ-6c6Q6r-a32J27-bZwG3C-8ip6Yn-64gotj-a2Yc86
  • http://www.nasdaq.com/symbol/bpt/dividend-history
  • http://en.wikipedia.org/wiki/BP_Prudhoe_Bay_Royalty_Trust
  • http://sdtinformation.sandridgeenergy.com/phoenix.zhtml?c=247447&p=irol-dividends
  • file:///C:/Users/Owner/Downloads/SandRidgeMississippianTrustI_10K_20140314.pdf
  • http://www.nasdaq.com/symbol/bpt/dividend-history
  • http://api40.10kwizard.com/cgi/convert/pdf/SDR-20140314-10K-20131231.pdf?ipage=9465921&xml=1&quest=1&rid=23&section=1&sequence=-1&pdf=1&dn=1
  • Royalty Trusts are one of the worst ways to supplement Social Security

    1. 1. Royalty Trusts Are One of the Worst Ways to Supplement Social Security Photo credit: Flickr/PhotoAtelier
    2. 2. For millions of Americans, Social Security doesn’t provide enough income for retirement.
    3. 3. Retirees therefore must seek ways to supplement their Social Security.
    4. 4. Some stay in the workforce longer.
    5. 5. Others rely on investment income to bridge the gap.
    6. 6. That investment income needs to come from secure sources.
    7. 7. The need for income security makes owning a royalty trust one of the worst ways to supplement Social Security.
    8. 8. Take a look …
    9. 9. BP Prudhoe Bay Royalty Trust • Last 10 distributions: NYSE: BPT Date Amount 4/11/2014 3.01$ 1/13/2014 2.53$ 10/10/2013 2.17$ 7/11/2013 2.14$ 4/11/2013 2.41$ 1/11/2013 2.32$ 10/11/2012 1.82$ 7/4/2012 2.31$ 4/12/2012 2.65$ 1/12/2012 2.52$
    10. 10. Why this trust won’t work: • The distribution isn’t very consistent from quarter to quarter. • It is therefore a poor choice for supplementing a fixed-income need. • Finally, the trust expects to continue making royalty payments only through 2027.
    11. 11. SandRidge Mississippian Trust I • Last 10 distributions: NYSE: SDT Date Target Actual 11/29/2013 0.77$ 0.60$ 8/29/2013 0.76$ 0.61$ 5/30/2013 0.74$ 0.59$ 3/1/2013 0.73$ 0.65$ 11/29/2012 0.74$ 0.68$ 8/29/2012 0.70$ 0.73$ 5/30/2012 0.65$ 0.79$ 2/29/2012 0.63$ 0.79$ 11/30/2011 0.67$ 0.82$ 8/30/2011 1.01$ 1.07$
    12. 12. Why this trust won’t work: • Distribution has begun to underperform the target over the past few quarters. • Overall, the distribution isn’t very consistent, making it a poor choice for supplementing a fixed-income need. • Finally, the trust will dissolve and begin to liquidate on Dec. 31, 2030.
    13. 13. SandRidge Mississippian Trust II • Last seven distributions: NYSE: SDR Date Target Actual 11/29/2013 0.67$ 0.54$ 8/29/2013 0.69$ 0.68$ 5/30/2013 0.65$ 0.56$ 3/1/2013 0.60$ 0.53$ 11/29/2012 0.56$ 0.60$ 8/29/2012 0.46$ 0.50$ 5/30/2012 0.26$ 0.27$
    14. 14. Why this trust won’t work: • Distribution has begun to underperform the target over the past few quarters. • Overall, the distribution isn’t very consistent, making it a poor choice for supplementing a fixed-income need. • Finally, the trust will dissolve and begin to liquidate on Dec. 31, 2031.
    15. 15. 3 Big Problems With Trusts 1. They’re subject to commodity price risk. 2. They offer no growth opportunities. 3. Their payments fluctuate and will end at some point in the future.
    16. 16. A better way to supplement Social Security.

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