A Royalty Trust That Pays Monthly
Sabine Royalty Trust, ticker SBR, is one of the older and better-known oil and gas royalty trusts on the NYSE. It holds royalty interests in producing oil and gas properties, primarily in Texas, and passes nearly all of the income it collects through to unitholders in the form of monthly distributions.
Royalty trusts like Sabine sit at the top of the revenue stack. They do not drill wells or pay operating costs; they collect a share of the revenue from properties they own an interest in. That is the same structural appeal as Texas Pacific Land, the “29% Account” pick, although Sabine is a trust rather than a corporation and is a much smaller, simpler entity.
How It Differs From the “29% Account”
The difference between a royalty trust and a company like Texas Pacific Land is worth understanding. A trust is a passive pass-through vehicle with a fixed set of assets. It distributes what it earns, which means its payouts rise and fall with commodity prices and the natural decline of the underlying wells. A company like Texas Pacific Land, by contrast, can reinvest, acquire, and pursue new revenue streams like water rights, which is why it has been able to grow far beyond what a fixed trust can do.
That is not a criticism of Sabine; it is the nature of the structure. For an income investor who wants a high, variable payout from a passive oil and gas vehicle, a royalty trust like Sabine is a legitimate option. For growth, the corporate structure wins. We cover the corporate case in our Texas Pacific Land breakdown and the trust universe in our list of oil and gas royalty trusts.
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