Without a doubt, it's our most popular piece of research. Each
year we publish our annual "Top 10 Stocks" list. Put simply, these
are the 10 stocks my research staff and I think have the best
chance of beating the
in the coming year.
We've published this annual list since 2003. And over the years,
literally tens of thousands of investors have read -- and profited
-- from the advice.
There's a good reason why this research is so popular year-in and
In our inaugural edition in 2003 our top picks ideas beat the
S&P 500 by 12.0 percentage points in the course of the year.
And then came 2004... 2005... 2006... 2007... 2009... and 2010 --
our Top 10 Stocks trounced the overall market in those years as
In fact, through 2010 (2011 results haven't been finalized yet)
this annual list has returned 16.8% on average each year...
compared to 7.8% for the S&P 500. And if you look at the
compounded returns, then we're beating the S&P 157.1% to 55.5%.
That's more than 101 percentage points.
With this performance in mind, I wanted to share a sneak peek into
Top 10 Stocks for 2012
. And as a thank you for being a
Opportunities subscriber, I've selected one of the many
high-yielders that made our list this year to share with you...
A stake in dozens of oil wells... and a double-digit
SandRidge Mississippian Trust (NYSE:
has only one mission -- take in royalties and pay them out to
, SDT owns a stake in dozens of wells run by its
SandRidge Energy (NYSE:
. SandRidge Energy takes care of the drilling, production,
marketing, and selling of the oil and gas produced (production is
split roughly 50/50 between oil and gas). The royalty trust -- SDT
-- is passive in the relationship. It doesn't have to do a thing.
In return for the initial investment when it went public, its
investors get a cut of all the oil and natural gas sold from the
For the Mississippian Trust, SandRidge Energy packaged a 90%
interest in 37 of its oil and natural gas wells in Oklahoma. In
other words, for every dollar in oil or gas pumped by these more
than three dozen wells, owners of the royalty trust are now entitle
d to 90 cents in royalties.
But that's just the start...
That's because in addition to the 37 wells it owned at its
inception, the trust also gets a bonus. Between its inception in
December 2010 and December 2015, parent company SandRidge must
drill an additional 123 wells, of which SDT will own a 50% stake.
In other words, in the next several years, each unit of this trust
will have a stake in an increasing number of wells. And there is a
powerful incentive in place for the parent company to get those
wells drilled... and increase distributions... sooner rather than
As is common practice, SandRidge Energy retained ownership of over
10 million of the 28 million outstanding units of SDT. But most of
those (7 million units) are subordinated
. Unlike the shares we're investing in, those subordinated shares
don't receive dividends unless regular common unitholders get a
predetermined minimum payment each quarter. If the distribution
falls below that threshold, then the payments to the subordinated
shares will be reduced to make up the difference to the regular
That means these shares have a built-in buffer to ensure we see
strong distributions going forward.
In the latest quarter, SDT paid a distribution of $0.82 per unit,
giving a forward yield of 11.1% at today's price.
Action to Take -->
Shares of SDT have run-up in the past few weeks, but I think the
high yield still makes the shares attractive at these levels. But
if you're a more conservative investor, then waiting for a pullback
before buying isn't a bad idea.
: One stock has raised dividends 110% in five years... another has
$8.25 per share in cash (45% of its share price)... another yields
8.0% while it has nearly doubled itsnet income year-over-year.
These are the type of investments that make up my
Top 10 Stocks for 2012
To learn more about these top picks for the coming year,
visit this link
-- Paul Tracy
Disclosure: Paul Tracy and/or StreetAuthority, LLC hold a
position in SDT.