Selling coal but sticking with resources
Could natural-resource stocks soon be falling out of favor?
My choice was between selling this master limited partnership or Penn Virginia Resources (PVR), and I decided to stick with Penn Virginia because the company's gas distribution, coal-bed methane and timber assets give it a more diversified blend of natural-resources businesses than Natural Resource Partners.
Part of the decision is company-specific, though. The company has seen debt rise in the third quarter. That, plus coal volumes that, in the third quarter were down 28% from the third quarter of 2008, will make it hard for the company to increase distributions by more than a few cents a unit in 2010.
I'm selling these units out of my Dividend Income Portfolio with a 60% drop in price since I purchased them on September 6, 2005, but with a total loss, including $1,553 in dividends, of 44%.
The company paid its third-quarter dividend on Nov. 13.
Jim Jubak plans to sell his units of Natural Resource Partners three days after this column is posted.
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Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
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