Nathan Slaughter

Last week, I told you about Chesapeake Granite Wash Trust (NYSE: CHKR) -- a royalty trust paying a double-digit yield.

Royalty trusts boast some of the highest yields on the market -- typically 6% to 8%, but payouts north of 10% aren't uncommon. And aside from writing generous paychecks every quarter, many of these securities have also delivered triple-digit share price appreciation.

One of the best examples of what these securities can do is BP Prudhoe Bay Royalty Trust (NYSE: BPT).

This trust operates in the Prudhoe Bay oil field located on the North Slope in Alaska -- the largest oil field in North America. The field covers 213,543 acres and is responsible for about 10% of the United States' total oil output.



If you owned BPT, you'd own royalty interests in 150,000 acres of the Prudhoe Bay oil field. And you'd be getting paid a royalty on thousands of barrels of crude pulled from this reserve.

As you would expect, that's been pretty profitable. In the past 10 years, BPT has earned a total return of 2,248%. A $5,000 investment just 10 years ago would be worth $117,400 right now.

To give you an idea of how strong a return that is, integrated oil giant Chevron (NYSE: CVX) returned 231% over the same period. That would have turned $5,000 into $16,550. Not bad, but nowhere near what BP Prudhoe Bay Royalty Trust did.


Nathan Slaughter

Nathan Slaughter is Chief Investment Strategist of Market Advisor, Scarcity & Real Wealth, and Energy & Income at StreetAuthority.com.
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