The Price of Gasoline in Pictures

Yes, it seems like every day the price of gas at the pump keeps going higher. It is hard to believe that back in January of 2009, the price per gallon of U.S. regular all-formulations retail gasoline was only $1.67 and now it is above $3.80 a gallon. If you have the privilege of living in California, you will pay an average price for regular of $4.21 per gallon and in the City of Los Angeles, the average price is $4.25 per gallon.

Since a picture is worth a thousand words, I thought I would provide you with a couple of graphs showing the increase in the price of gasoline since both 1990 and 2009.

Top American Oil Royalty Income Trusts

Now that oil is over $100 a barrel, income investors are taking a closer look at oil and gas income investments. Several options are available. First, there are the stocks of the multinational oil companies, such as Exxon Mobil Corp. (XOM) with a 2.1% yield and ConocoPhillips (COP), which has a 3.3% yield.
But there are other investment instruments, including oil income royalty trusts, oil master limited partnerships also known as MLPs, and one example of a publicly traded Limited Liability Company or LLC. Income from trusts and MLPs avoid double taxation; virtually all earnings are passed through to the shareholders without being taxed at the company level.

The royalty trusts have several advantages over the partnerships. Limited partnerships don't send out 1099 forms, they send out a Schedule K-1 Form, and the income is reported on your tax return differently from regular dividends, with additional forms and preparation time involved. In addition, putting an MLP into a retirement plan can create problems because of the UBTI or Unrelated Business Taxable Income issue, which could put the tax deferred status of your retirement plan in jeopardy. I am not an accountant, so discuss MLP's with your tax advisor or CPA for clarification, before investing.

The royalty trusts don't have this problem as they send out 1099's on their income distributions, similar to dividends. According to a list just developed at WallStreetNewsNetwork.com, there are several different oil royalty income trusts with yields ranging from 4% to above 11%.

For example, Hugoton Royalty Trust (HGT), which trades at 13.8 times earnings, pays a generous yield of 6.7&. This Dallas, Texas based company pays dividends monthly and was founded in 1998.

San Juan Basin Royalty Trust (SJT) yields 6.6% and sports a price to earnings ratio of 6.6%. This Fort Worth based company also pays monthly and was founded in 1980.

Mesa Royalty Trust (MTR) is an Austin, Texas trust that has been around since 1979. It trades at 13.8 times earnings and yields 5.7%. As with most other oil trusts, distributions are made monthly.

When you check out the free list of oil income investments at WallStreetNewsNetwork.com, pay close attention to the last column, which shows the company structure, either limited partnership, trust, or LLC. Also, although a few of these have extremely high yields above 8%, use caution before investing as the yields may not be sustainable.

Disclosure: Author does not own any of the above.

By Stockerblog.com

High Yield Utilities that can Benefit from Lower Fossil Fuel Prices

According to the U. S. Energy Information Administration, fossil fuels supply about 70 percent of the country's requirements for electricity generation. Currently the dominant fossil fuels used by the industry are coal, petroleum, and natural gas.

Many investors feel that the price of oil has peaked for now and is in a downtrend. Some analysts believe that due to the glut of natural gas and the recent major gas finds, that the price of gas will remain low for a while. The price of coal is much lower than it was in 2008. If this trend continues, investors could benefit from investing in utility stocks that use oil, gas, and/or coal as a major fuel source of electrical generation, since the cost savings for these companies should pass through to the bottom line. According to WallStreetNewsNetwork.com, there are around 30 electric utilities with yields above 4%. Many of these companies use fossil fuels as a significant source of fuel to generate electricity.

For example, Pinnacle West Capital Corp. (PNW) has one of the heaviest exposures, with approximately 31% of its electric energy coming from natural gas and oil. About 38% comes from coal and 27% from nuclear. This Phoenix, Arizona based electric utility trades at 14 times earnings and provides a generous yield of 5%. Earnings for the quarter ending September 30 were up 25%. The company reports its latest earnings February 18.

OGE Energy Corp. (OGE) has 38% of its energy coming from natural gas, with 60% from coal. The company serves the south central United States. The stock has a price to earnings ratio of 15 and a yield of 3.3%. Earnings for the quarter ending September 30 were up 19%. The company reports its latest earnings February 17.

Westar Energy Inc. (WR) generates about 7% of its energy from natural gas, with 78% from coal and 14% from nuclear. This utility, which serves Kansas, has a PE of 13.8 and a yield of 4.8%.

If you like utility stocks, you can find a free Excel database of utility stocks, which you can download, update and sort, at WallStreetNewsNetwork.com

Disclosure: Author did not own any of the above at the time the article was written.

By Stockerblog.com