Stock to Sell #5 – Sabine Royalty Trust (SBR)
Unlike the more familiar master-limited partnerships (MLPs), which often own or operate energy, mining and other assets, the typical royalty trust holds only the right to receive income from a fixed number of properties. And unlike their Canadian counterparts, U.S. royalty trusts don’t have the ability to replace assets, and so they must, over time, deplete to no value and close. They have the highest payout when oil and gas prices are highest, but in a period of falling prices, which is now happening, their dividends fall too.
Sabine Royalty Trust (SBR) holds royalty and mineral interests in various oil and gas properties. Over time, its dividend distributions of $3.73 annually (7.3% yield) will decline.
Since March, the stock has been trading in a descending triangle with support at $48.50 to $51. MACD issued a sell signal on Sept. 27, and our internal indicator flashed a sell signal on the same day. Sell SBR at the market.