"Our readers turned $20,000 into $347,400 in a single stock. We've found 3 more equally explosive opportunities we want to tell you about today."
There is clearly no investing sector like energy.
Plenty of sectors get hot from time to time and can make you good money. Biotech was hot in the '80s... dot-com boomed in the '90s... gold has been on a run since 2003.
But energy is a different animal.
This sector is always in play... and the best energy investments routinely hit it out of the ballpark, year after year—even in recession.
In September, 2008 Wall Street crumbled. Major banks became beggars. The U.S stumbled into the Great Recession and the not-so-great recovery.
Despite all this, in 2008 and 2009, investors who bought our Bakken oil recommendations are now ahead by anywhere from 177% to 223.5%.
The right energy stocks are financial juggernauts that chug ahead through just about anything. But some are also so explosive that a $20,000 investment handed our readers a $347,400 profit in less than seven years. That was in an offshore driller that was paying us almost 12% when we bought it.
That home run was a perfect example of the good things that can happen when you find a solid energy operation that shares the wealth with generous dividends.
Even though that drilling stock has skyrocketed, it's still a good buy (and continues to yield almost 9%). But at this point we're looking at three even better opportunities to score a repeat of that sort of massive success.
We'll get to all three in a minute. But first it's important to understand why energy stocks and dividends go together so well...
We're Roger Conrad and Elliott Gue. We run Energy & Income Advisor — a new online investing service.
We focus on both energy AND income for a reason. Because as I'll explain in a minute, if you specialize in energy stocks like we do, sticking to the yielders is a very smart strategy.
We've studied energy stocks and income stocks separately for decades. But in the past few years it's become clear that something magical happens when you combine these two themes into a single investment (just as we saw with the 12%-yielding driller which turned $20K into $347,400 for us).
You can see this for yourself by running a few simple stock screens. If you do, a few fascinating facts jump out.
First, you'll notice that only 4.8% of U.S. stocks are in the energy sector. But 40% of the stocks yielding more than 6% are in energy. And here's what's really amazing. When you rank this last group by their total return over the past 10 years... seven of the top 10 are energy stocks.
Look at this list of the top-returning stocks (yielding 6% or more) that we generated from our Bloomberg machine. Those are some huge return numbers. And note how energy-heavy this list is.
Energy & Income Advisor is a new service, but we've been covering energy stocks for a long time. Just ask anyone who racked up these gains with us:
You can see from our buy dates how long we've been following energy stocks. We bought Entergy Corporation and MDU Resources way back in 1990. It's no coincidence that these long-term holdings are among our biggest gainers.
Over the years, we've released our research in a variety of services, including Utility Forecaster, The Energy Strategist, MLP Profits and Canadian Edge. Each one focused on a different sector of the energy complex—always with a strong bias toward the more generous dividend payers in the space.
Now, after a combined 41 years of stock-picking experience, we're venturing out on our own, completely independent and beholden to no one but our subscribers.
We're launching our own service to share the most lucrative energy opportunities we can find, with a special focus on generous payers, such as master limited partnerships, royalty trusts and select Canadian stocks.
Whether it's oil, coal or natural gas... offshore drillers, shale plays or shipping firms... explorers, pipelines or renewables... by focusing 100% on this crucial sector, we can often detect trends before they reach the mainstream media. It's what we've already been doing for decades... only now we're doing it on our own.
If you like what you see of our research here today, try a no–risk trial subscription to our online advisory service. When you come on board, we'll give you a series of free bonus reports explaining, in much greater depth, the recommendations you see here.
Now let's get to work and dig into our three favorite cash-cow energy opportunities...
Monster Energy Yielder #1
The first securities we want to tell you about aren't stocks, and they aren't bonds, either. But they are one of the top performing investments on Wall Street over the past 10 years –– up 311%. Common stocks are up just 103% over that stretch.
These "oddball" securities are called master limited partnerships, MLPs for short. MLPs have two overriding characteristics. They are overwhelmingly in the energy business... and they usually pay enormous dividends.
In other words, they are perfect for our energy-income investing style. They give you the same double whammy that has propelled so many of the big winners to the top of the returns chart we showed you earlier.
If you'd like a nice inflation hedge that pours a steady stream of cash into your portfolio, cash that is tax-free potentially forever, you need to check out MLPs.
It's hard to believe in this day and age of taxes everywhere you turn—but MLPs get a complete pass from the tax man. So they pass all their cash flow on to you... and because of a quirk in accounting law, you might never pay taxes on the distributions you get at all!
Just think how much faster your nest egg would multiply if every dividend dollar you earned stayed in your own account, and none ended up in Uncle Sam's.
Apart from that sweet tax break, what we love most about MLPs are their ever–rising distributions. No other asset class hikes its distributions more consistently than MLPs do. Some MLPs have hiked them for more than 40 quarters in row.
What are they so dependable? Because many MLPs operate "midstream" energy assets–– pipelines, storage tanks, terminals, etc.
In other words, they profit from moving energy, not from digging it up and selling it. .. so the more energy the world uses, the better.
If you prize high yields it doesn't get much better. The 10 most generous yielders in this space right now throw off an average yield of 12.9%.
Soaring yields attract most investors to MLPs. But there's a growth story here too. Plenty of MLPs have been capital gains bonanzas for investors. Buy into these cash cows, hold on for the long term, and you could make a fortune. Plenty of investors already have.
Check out what happened with Kinder Morgan Energy Partners...
If you had put $10,000 in Kinder Morgan at its launch in 1992, you would have gotten 430 shares for your money. Now, after two 2:1 splits, you'd have 1720 shares worth $151,360. And you'd be pulling in $8,944 in dividends annually—an 89.4% yield on your initial $10,000 investment—every year! And let's not forget the $88,509 in dividends you would have already pocketed over the years.
Of course, if you had reinvested your distributions you'd be even happier. You'd now have 7,380 shares worth $649,440. And you'd be set for another $38,376 payout this year. (That's almost four times your initial investment!)
Right now, we see only a handful of MLPs offering the right mix of income and financial strength to make them "buys" at current prices.
To make it easy for you, we have written up all seven in one report,, Mile-High Dividends: Your Pipeline to Lifetime Tax-Free Wealth. I'll tell you how to get it in a second.
One of the picks in this report is a fairly new MLP that captured our attention because of its break-neck growth trajectory, recent insider buying frenzy, and its healthy 8.7% yield. If you're hungry for cash dividends and growth, you want this one. It is an upstream MLP operating in Kansas' Hugoton basin, mainly in oil production.
Its growth projections are astounding. It paid out $1.49 in FY2012 and is on track to distribute at least $1.98 in FY2013. And your income is almost guaranteed because the partnership is hedged through the end of 2014.
With an 8.7% yield, they'll be making plenty of cash even if this dividend king's share price never budges.
Monster Energy Yielder #2
Who doesn't feel like kicking back from time to time and getting paid for doing nothing?
We've found a tiny class of 29 companies that let you do just that.
They are called "royalty trusts" and they let you stake a claim in some of the richest oil & gas finds on the planet without lifting a finger.
Their track record is phenomenal. Their average return over the past 10 years is an astounding 718%.
But it's a tiny industry. There are only nine of these trusts in the entire country above $500 million in market cap—a pittance on Wall Street.
It's not even really an industry, so much as an accounting creation. Royalty trusts exist solely to finance wells... collect royalties on production... and distribute the money to shareholders.
They have no physical operations of their own. They don't own office buildings, explore for oil or buy equipment. They don't have to worry about insurance or maintenance. They don't even have employees.
They're just legal entities administered by bankers who collect royalties from the oil and gas drillers... and pass the royalties along to you—without paying a penny to the IRS.
Once you own an interest in one of these wells, you collect a few cents every time the company sells a barrel of oil or a cubic foot of natural gas.
Just like the master limited partnerships we discussed a minute ago, as long as the trust pays shareholders at least 90% of its earnings, it's exempt from corporate taxes. That's why almost all of the earnings "pass through" directly to shareholders in the form of royalties.
One entry in this sector -- BP Prudhoe Bay Trust (NYSE: BPT) -- has returned 1,495% over the past 10 years. If you had bought 1,000 shares back then it would have set you back $14,730. You'd have collected $80,026 in dividends by now... but if you had reinvested those dividends, your stash would be worth $235,091.
Another one we found, Mesabi Trust (NYSE: MSB) has seen capital gains of 362% over the past 10 years. That turns every $10,000 invested into $46,200. That's pretty good... but when you include its dividends, your $10,000 is actually worth $110,208.
Why are these returns so high? Because they issue such big royalty checks! 10 of the 29 companies in this class yield more than 10% per year.
We think every investor should have a few of these cash machines in their portfolio. We especially recommend a trust we've found that owns about 1,000 oil wells in West Texas. There's nothing glamorous about its business... so when the rights to buy a stake in these oil wells went on market, they were valued cheaply. We watched carefully as this new trust handily exceeded all production estimates for both oil and natural gas.
We've put everything you need to know about this trust in a second report called Mega-Dividends: Oil and Gas Trusts with Yields of up to 16%. You'll see how to get your copy in a moment. And it won't cost you a cent. But first let's look at one more big-picture energy opportunity...
Monster Energy Yielder #3
If you agree with us that the secret to a home run investment is to get in before "the crowd," this next opportunity is perfect for you. Because we can guarantee you that very few people realize that two-thirds of our country's entire shale reserves are in California.
You don't hear much about it, but lurking beneath a maze of California highways lies the Santa Maria surprise--one of the most unusual geologic deposits on earth... a vast sea of oil created by ancient algae deposits dating from the Jurassic Period.
This single deposit accounts for about 65% of the US Dept of Energy's estimate for total oil recoverable in the Lower 48. That's quadruple the reserves of the much-hyped Bakken Shale!
The Santa Maria shale play covers more than 1,700 square miles and contains about 15 billion barrels of recoverable crude oil.
What's more, because of regional pricing differences, oil like this sells for 20% more in California than in the rest of the country. So you can add 20% to any valuation estimates on this massive pool of energy just because of where it sits.
We've got our eye on a Bakersfield company that's tapping into these billions of barrels of oil right now. This outfit gives you prime oil exposure across a high-quality asset base in premium-priced California markets.
It pays 14% as we speak, and in a nice touch, it pays you monthly. Like clockwork. These payments aren't stopping anytime soon either, because the company is 70% hedged on all oil and natural gas production until 2014. So you won't get any nasty surprises to your cash flow.
This is a lucrative opportunity. An 11% yield now and a projected dividend increase of up to 70% next year. Not many companies can claim a rising 11% dividend. Because it's still a relatively new story, the Street is still asleep on this one. We're scooping up shares now while it's still a bargain.
It's just a hunch, but we think you'll be hearing a lot more about the Santa Maria surprise in the coming years. You will certainly hear a lot about it in future issues of Energy & Income Advisor.
In investing, time is money: This 45% discount to Energy & Income Advisor will only be available through Friday November 15 at 5PM ET.
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Only you can decide if our new service is right for you. So please take the next 30 days to read the issues, special reports and alerts, visit the website, look at the archives, buy a few of our recommendations – whatever you need to feel comfortable. At the end of that time, if you don't think Energy & Income Advisor is right for you, we send your money back. It's that simple.
All sorts of stocks pay dividends. But when you sift through the real cash cows–stocks yielding 6% or more–seven of the 10 top long-term winners are in energy. And they averaged a 688% gain each.
Clearly, if you're after profits that could make a real difference in your financial situation, dividend-paying energy stocks are a good hunting ground.
We're putting everything we know into our new service... and you can try it before you decide to buy it. So why not take us up on that 30-day trial period and see for yourself?
To Your Wealth,