MV Oil Trust (NYSE:MVO)

CAPS Rating: 4 out of 5

Expl/dev/prod/gatrng/aggtn/sale of oil&natural gas

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Player Avatar DavidOfDukeLow (44.13) Submitted: 7/11/2011 11:54:50 PM : Outperform Start Price: $24.43 MVO Score: -44.86

This royalty trust generates income by selling oil and natural gas produced by MV Partners LLC, an exploration and production firm operating in Kansas and Colorado. MV Oil Trust's payout ratio is currently 100%, good for a dividend of $3.07 a share and a yield of 8.4%.

It's a lot of yield for the risk, as shown by beta -- a metric used to compare a security's volatility to the overall market. As the benchmark, the market is assigned a beta of 1.0. So, MV Oil Trust's beta of 0.76 means it's 24% less volatile, yet it's yielding nearly five times the market's measly 1.8%.

Shareholders can probably count on healthy dividends for quite some time. The trust isn't scheduled to terminate until June 30, 2026, or after 11.5 million of barrels oil equivalent (MMBOE) have been produced, whichever is later. Considering that fewer than 4 MMBOE have been produced in the five years since inception, the trust ought to be able to maintain a high payout for at least another decade.

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