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5 Oil and Gas Companies That Pay Monthly Dividends

You know what's better than a dividend stock? A dividend stock that pays you every month. Earlier this week, I identified five companies with monthly dividends. Today, based on some recommendations from readers on my previous article, I have found five companies focused on oil and natural gas whose monthly dividends could provide you with the income needed to meet your monthly obligations or with steady capital to reinvest and grow your portfolio.


Recent Monthly Payment

Current Yield

Enduro Royalty Trust (NYSE: NDRO  ) $0.14 8.3%
San Juan Basin Royalty Trust (NYSE: SJT  ) $0.119 7.8%
Permian Basin Royalty Trust (NYSE: PBT  ) $0.126 7.4%
Baytex Energy (NYSE: BTE  ) $0.22 4.6%
Provident Energy (NYSE: PVX  ) $0.044 4.4%

Source: Yahoo! Finance.

What's a royalty trust?
A royalty trust is similar to a REIT, but income is derived from oil and gas rights instead of real estate or mortgages. As long as the trust pays out 90% of earnings as distributions to shareholders, the trust can avoid corporate income taxes. With this special treatment, however, comes special tax reporting requirements, so be aware of that prior to purchasing royalty trusts. Their assets also deplete over time, so the income is not guaranteed to last beyond the life of the trust, and in some cases, shares become completely worthless when the trust ends.

That said, Enduro Royalty Trust is brand-new, offered to investors in November 2011. Ownership provides the opportunity to share in the profits of oil and natural gas production from the trust's properties in Texas, Louisiana, and New Mexico. San Juan Basin Royalty Trust is the largest U.S. royalty trust, also benefiting from production in New Mexico. Finally, Permian Basin Royalty Trust provides investors with a share of income from two properties in Texas.

Two Canadian options
Both Baytex Energy and Provident Energy are set up similar to the royalty trusts mentioned above. One difference is that they are based in Canada, but they also produce some of the oil and gas they sell. This is different from the U.S.-based royalty trusts, which are usually set up by banks solely to distribute the proceeds from other producers.

Baytex Energy engages in the acquisition, development, and production of oil and natural gas in Western Canada and North Dakota. Formerly a trust, it acquired assets the past few years that led to it becoming more active in the actual production of oil and natural gas. Provident Energy has assets focused on three of the most important North American energy plays: the Alberta oil sands, the Bakken shale, and the Marcellus shale. Because of this, Pembina Pipeline announced its plan to purchase the Canadian energy company last month.

Dividends are great
Though these aren't dividend payers in the traditional sense, their monthly dividend-like distributions could be used to pay some monthly expenses. In addition, they are a nice way to get some exposure to oil and natural gas in a world defined by fossil fuels. If you are looking to diversify your portfolio with income-generating stocks, be sure to get a copy of our free report:"Secure Your Future With 11 Rock-Solid Dividend Stocks." Even though none of the included companies pay monthly dividends, it should still be worth your while to get your copy today!

Fool contributor Robert Eberhard holds no position in any company mentioned. Follow him on Twitter or click here to see his holdings and a short bio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (2) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 15, 2012, at 6:28 PM, Divsaremylife wrote:

    Just a point of caution. SJT calculates its dividends on production and pricing from 2 months ago. The most recent January distribution of $0.119 was paid from November 2011 production. Gas prices have been sharply lower in December, January, and February. With Natural Gas in the $2.5 range, SJT has typically paid between $0.02 and $0.04 per month. Not quite the current yield it seems. I am not sure if the others have the same delay or are unhedged, like SJT.

  • Report this Comment On February 15, 2012, at 7:21 PM, XMFTheGuruEbby wrote:

    Thanks for the heads up. That was something that I hadn't considered.


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