haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Re: Strategy for a (substantially) higher withdraw
You may be OK. But it is risky. At the same time, 70% S&P 500 allocation is not only risky, it is like laying 3:5 at the track on a horse with a limp.
VNO for one is very unlikely to disappoint when bought to yield 8%. I did it (@$38.75), and sold it around $50. probably shouldn't have sold, but it may get back to that 8% yield. AIV is a large national apartment REIT. While there may be problems in that industry now, it has to recover and probably AIV with it. Some expect AIV to cut it's dividend which is why it yields more than other quality apartment REITs. I would be sure to take good look at their balance sheet and cash flow, not just the dividend.
Some of those royalty trusts are different. I have owned SJT on and off for almost 20 years, and I have probably had more total return from it than any other investment. But I bought it at $5, not $20. During the years I owned it, there were months with no payout at all, due to high capital expenses and low gas prices. There also was a time when BR was screwing SJT on the royalties. SJT is unusual in the the geology of the San Juan Basin pretty much guaranties a long reserve life. Couple that with high natural gas prices, and you have pretty good cash flow. MTR is I believe weaker- it has some San Juan gas, but much of it's production is from the Hugoton field, which has been producing for over 50 years, and is well on it's way to being depleted. You didn't say how old you are, but I don't think these RTs are for the lifetime of a fairly young person.
The tanker trusts are even more tricky.
Overall, royalty trusts are a way for insiders to capitalize an income stream at a retail rate. As such, over any long period, and without any special insight or skill on the part of the investor, they might be expected to provide a return that is at best pretty average when risk adjusted. If there is any fraud or optimism in their reserve reporting, the units could hit an air pocket. I can't rememnber the details, but in 1978 or '79 there was a trust, I think named Wilshire, that disappeared because it's reserves had been overstated.
I trade some of these things, over long swings, and I pay close attention to them. If we truly are in a permanent state of falling oil and gas production, and if the trusts that one owns can keep a decent production going, they should stay high priced. But it can get scary if you have your livehood riding on it. Furthermore, the accounting is very opaque, so you never really know what is going on. ( Although anymore that may describe just about any public business.)
As a very general rule, it is hard to get safe long term high yielding investments during a period of historic low interest rates. Maybe not impossible, but it tends to be fisihng in fished out water.
In any case, buena suerte!
Mikey
We know that any one of the individual stocks could reduce, or stop the dividend or worse go backrupt. It is the average yield of the portfolio (based on original price) and the growth of that yield to match or beat inflation that matters. okay guys what am I missing? Hank
You may be OK. But it is risky. At the same time, 70% S&P 500 allocation is not only risky, it is like laying 3:5 at the track on a horse with a limp.
VNO for one is very unlikely to disappoint when bought to yield 8%. I did it (@$38.75), and sold it around $50. probably shouldn't have sold, but it may get back to that 8% yield. AIV is a large national apartment REIT. While there may be problems in that industry now, it has to recover and probably AIV with it. Some expect AIV to cut it's dividend which is why it yields more than other quality apartment REITs. I would be sure to take good look at their balance sheet and cash flow, not just the dividend.
Some of those royalty trusts are different. I have owned SJT on and off for almost 20 years, and I have probably had more total return from it than any other investment. But I bought it at $5, not $20. During the years I owned it, there were months with no payout at all, due to high capital expenses and low gas prices. There also was a time when BR was screwing SJT on the royalties. SJT is unusual in the the geology of the San Juan Basin pretty much guaranties a long reserve life. Couple that with high natural gas prices, and you have pretty good cash flow. MTR is I believe weaker- it has some San Juan gas, but much of it's production is from the Hugoton field, which has been producing for over 50 years, and is well on it's way to being depleted. You didn't say how old you are, but I don't think these RTs are for the lifetime of a fairly young person.
The tanker trusts are even more tricky.
Overall, royalty trusts are a way for insiders to capitalize an income stream at a retail rate. As such, over any long period, and without any special insight or skill on the part of the investor, they might be expected to provide a return that is at best pretty average when risk adjusted. If there is any fraud or optimism in their reserve reporting, the units could hit an air pocket. I can't rememnber the details, but in 1978 or '79 there was a trust, I think named Wilshire, that disappeared because it's reserves had been overstated.
I trade some of these things, over long swings, and I pay close attention to them. If we truly are in a permanent state of falling oil and gas production, and if the trusts that one owns can keep a decent production going, they should stay high priced. But it can get scary if you have your livehood riding on it. Furthermore, the accounting is very opaque, so you never really know what is going on. ( Although anymore that may describe just about any public business.)
As a very general rule, it is hard to get safe long term high yielding investments during a period of historic low interest rates. Maybe not impossible, but it tends to be fisihng in fished out water.
In any case, buena suerte!
Mikey