As we all know, nat gas prices can have some big impacts on a company like RNF. As a fellow dividend investor, I thought i would share with you my own Nat Gas hedge strategy. Heres my expamle to show you how it work. Say we want to invest 10k and what i do is i put 5k into RNF and 5k into a good dividend yeilding MLP (I use BWP for myself but theirs others just as good). As nat gas prices ran up my nat gas mlp went up 16% in price while RNF went down. I then sold 2.5k worth of the mlp locking in a good gain and rolled it into RNF. so the ratio now is 25% nat gas 75% fertalizer. If nat gas prices do back down and RNF goes up 16% i will then sell 2.5k of RNF and buy back the nat gas mlp. Why 16% gains? thats cause its 2x the dividend yeild that where it gets profitable enough to pay the cap gains on the sales. I hope this helps other long term dividend investors to make money over long term while still earning nice dividends.
This is a longer term dividend strategy and you may make 1 or 2 of these trade a years which doesnt really make any trouble. Since MLP's of all types are considered pass through entities and you have to claim your fair share of earnings, etc. But since both rnf and bwp are MLP its makes little difference if your holding rnf for 6 months claiming the earning on that or bwp for 6 months.