Jan 27 2009
One Stock that Holds Its Value
Throughout all of the corrections in the market, some stocks are holding steady. One, in particular, has been running between the same range now for over three years: British Petroleum Prudhoe Bay Royalty Trust. (BPT) It vacillates between $69 to $96 depending on the price of oil or the time of the dividend payout. And it’s on the low side right now.
There are good reasons to like BPT. First, it has a quarterly dividend of 9%, a P/E of 6 and a consistent payout record. In this time of economic trial, BPT is like the Energizer Bunny that just keeps moving along.
Consider the upside potential with BPT. First, it is holding its value even though the price of crude is the lowest it has been in years. That means if -or when- the price of oil goes back up, so will the price of BPT.
Critics say that the pipeline of Alaska is going to need replacement, that more sudden leaks could cost the company millions in clean up and restoration. That’s true, but this cost is borne by all of the companies that partner in this pipeline endeavor. Besides, any replacement parts will be one time expenses designed to last for many years, not a repeated fix. The nice part about the pipeline: it’s in a relatively stable are of the world. It doesn’t have to fight tornadoes or hurricanes, though earthquakes make everyone jump. Only men can make it an environmental disaster, as happened several yeas ago when a man shot a hole in the line causing millions of gallons to spray out everywhere.
In general, though, BPT has been a great stock to have in this economic downturn. And that is the finest thing anyone could have.
