by Robert Hauver
Looking for cheap high dividend paying stocks? MV Oil Trust, (MVO), has shown a recurring pattern of price troughs that rise into peaks as it approaches its quarterly ex-dividend dates, which fall around the 12th of January, April, July, and October. It recently crossed back above the oversold line on its stochastic chart:
Dividends: With its 11%-plus dividend yield, MVO sits atop the Energy section of our High Dividend Stocks By Sector Tables. By law, trusts are required to pay out at least 90% of their income in distributions, in return for not paying taxes. MVO’s next ex-dividend date should be around October 12th. (Trust dividends are referred to as distributions.)
Dividend History: MVO will need to pay out at least $.76 in October, to keep pace with its 2011 payout level. Judging by its earnings, (see below), this should be achievable.
Earnings: MVO is one of only of a handful of energy trusts which had strong earnings growth in 2011, (up over 25%), and in the most recent quarter. As noted below, MVO earns royalties from assets which are 98% oil, vs. only 2% natural gas, hence its advantage over natural gas trusts, many of which had been hurt by plummeting prices.
Profile: MV Oil Trust was formed in August 2006, by MV Partners, LLC. MV Partners conveys a term net profits interest to the trust that represents the right to receive 80% of the net proceeds from all of MV Partners’ interests in oil and natural gas properties, which are located in the Mid-Continent region in the States of Kansas and Colorado. As of June 30, 2006, the underlying properties produced predominantly oil from approximately 985 wells, and the projected reserve life of the underlying properties was in excess of 50 years.
Production from the underlying properties for the year ended December 31, 2005, was approximately 98% oil and approximately 2% natural gas and natural gas liquids. The underlying properties are all located in mature fields that are characterized by long production histories and numerous additional development opportunities to help reduce the natural decline in production from the underlying properties.
The net profits interest will terminate on the later to occur of (1) June 30, 2026, or (2) the time when 14.4 MMBoe have been produced from the underlying properties and sold (which amount is the equivalent of 11.5 MMBoe in respect of the trust’s right to receive 80% of the net proceeds from the underlying properties pursuant to the net profits interest).
Disclosure: Author had no positions in any of the stocks mentioned in this article at the time of this writing.
Disclaimer: This article is written for informational purposes only and isn’t intended as investment advice.
Author: Robert Hauver © 2012 Demar Marketing All Rights Reserved