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Sovereign Investor FAQ

Think about all your living expenses…

Your mortgage and utilities…

Your car loan and credit cards…

Your internet connection, cell phone and cable services…

They all have one thing in common: you have to pay them monthly.

If you depend on investment income to cover your living expenses, that may become a problem.

Traditional sources of income pay next to nothing. The next best alternative is dividend-paying stocks. If you know where to look, you can still find decent yields.

The problem is the frequency of the payouts. Most stocks pay quarterly dividends. So you may have to wait three months to get the next check. But the bills will keep coming … every month.

The good news is you don’t have to live with this mismatch between quarterly income and monthly expenses. There’s a group of companies that can pay hefty dividends every single month.

How to Quadruple Your Investment Income

I’m talking about royalty trusts.

Royalty trusts have no physical operations of their own and have very few, or no, employees. They are financing vehicles that are run by banks and managed by a trustee. But they do trade on stock exchanges.

The best thing about royalty trusts is their relatively high yield.

Royalty trusts don’t have to pay taxes on their corporate income. In exchange for this benefit, they must distribute 90% of their profits back to investors through dividends. That’s what allows them to pay out dividends much larger than traditional stocks or mutual funds.

The chart below compares the yield between royalty trusts and other sources of income. Stocks and bonds pay a yield of about 2%. Royalty trusts, as a group, are currently paying 8.6%. You can get a yield more than four times higher by investing in these trusts. It’s a no-brainer.

Trusts Beat Typical Sources of Income By a Factor of Four

See larger image

Not All Royalty Trusts Are Equal

But you have to be selective.

Most royalty trusts are also commodity plays. They normally generate income from the production of natural resources, such as coal, oil and natural gas.

In a way, they can help you hedge inflation risks. It’s a great way to generate income from commodities.

The downside is that a royalty trust’s cash flow varies with fluctuations in commodity prices and production. This can cause dividends to be very inconsistent from year to year. A plunge in oil prices or a drop in production volume, for example, may reduce the amount of the next dividend you will receive.

On the other hand, if you pick the right trust, you can secure a growing stream of dividends.

Some of these trusts have proven undeveloped reserves. Some even have explicit drilling programs. This provides the potential for growth in production volume, as new wells are brought into production.

This could lead to an increase in distributions that would flow right into your pocket.

There’s also a special group of trusts very few investors have heard of. They’re trusts that generate income from other businesses, such as fast-food chains. This eliminates the risks of the dividends being cut because of a drop in commodity prices.

Some of these trusts even pay monthly income. In fact, I have compiled a list of the most promising trusts for subscribers of my new service, Pure Income.

In sum, some royalty trusts can be a great hedge against inflation. Others give you income from cash-flow producing assets. But the most important thing is they provide much higher income than you can get from traditional sources.

That’s why if you’re looking for investment income, royalty trusts deserve a place in your portfolio.


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P.S. Royalty trusts can be a powerful way to generate solid monthly income. But they are just part of the income-building strategies I’m looking at in my Pure Income service. I’ve discovered a new breed of “ultra-dividend” companies that can provide you monthly income seven times higher than traditional blue chips. To see my latest research, click here.

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