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San Juan Basin Royalty Trust Message Board

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  • hotpanera2 hotpanera2 Feb 11, 2006 3:47 PM Flag

    KHospitaller PMT (OT)

    I agree with your calculation. The way he did it was to, in effect, ask "what is my 1-year return if the price stays the same and I sell after a year"? In that limited and unrealistic circumstance, adding the DRIP discount to the yield makes a certain amount of sense. Realistically, it's just buying the stock 6% cheaper which only marginally increases the yield as you have calculated.

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    • Right. I was wrong.
      What none of calculated, however, is the additional compounding effect of monthly distribution, a slight but, in the long run, significant added attraction; and the ability to pick up shares at deep discount when pull-backs occur. I will quit talking about 18% yields. Sorry.

      • 1 Reply to KHospitaller
      • Thanks to baw 1100, hot panera 2 and KHospitaller for straightening out the question I had about the PMT DRIP question. Pardon the delay in acknowledging your help, but I was away all day and this was the first opportunity to get to my computer.

        While not the most economic place to hold the units, mine are in my IRA 'cause that's where the money is. There is something to be said for the convenience of investing in the IRA. However, there is a price to pay - the Canadian monthly withholding and ordinary rather than capital gains tax on eventual withdrawal. And, KH, you are so right when you compare these large monthly payments to compounding.

        Good investing to all.


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