There are two ways to become exceedingly wealthy in this world: invent a revolutionary technology or own rights to someone else’s.

The greatest examples of this come from the world’s two wealthiest men: Bill Gates and Warren Buffett.

These two have made their billions in very different ways. Gates invented the means we’re using to write these words (Microsoft Word)…His software has netted him over $50 billion to date.

Buffett simply bought the rights to future earnings in everything from GEICO Insurance to Coca-Cola stock. He invested in these companies and their copyrights. Today, we’re going to go one step farther…

While we are going to recommend you buy shares of a company, we are really recommending you buy royalty rights to another’s invention.

The history of royalty rights law is long and brutal. One of the earliest cases of royalty disputes took place in A.D. 561 between St. Finnian of Moville and St. Columba of Iona.

At the famous Clonard Abbey in Cluain Eraird, Ireland, St. Finnian lent his pupil Columba a psalter, or psalm book. Columba copied the book and a dispute over who had rights to that copy erupted, leading to the Battle of Cul Dreimhne, where more than 2,000 men were killed.

In recent history, a much less bloody royalty dispute broke out between Paul McCartney and Michael Jackson over rights to many Beatles’ songs. These rights are estimated to be worth as much as $500 million.

Battles like this — in all likelihood — will continue to be fought for centuries…the royalties due on pirated music being the most hotly contested copyright dispute these days.

The never-ending fights over royalties make it clear just how lucrative they can be.

The most profitable example that comes to mind is the song “Happy Birthday to You.” Warner Music Group owns the rights to this song and collects around $2 million just from royalties every year.

Today, we have a less controversial — yet equally lucrative — opportunity for you…

The Oil Mine Royalty Play That You Can Buy Right Now…

Mesabi Trust (NYSE: MSB) is a $244 million royalty trust that holds interest in iron mines. Mesabi exists for one sole purpose – to collect income on the trust’s 1.5 billion mineable tons of iron ore reserves.

That has resulted in pretty sizable distributions to shareholders. The trust currently yields 11.9% annually – an amount that’s considerably higher than you would have netted in the broad market over the last several years time.

Mesabi’s stable yield has resulted in significant price appreciation in 2010. But that shouldn’t scare you away from shares. Remember, I’m advocating buying this royalty trust for the income it provides, and with an 11.9% yield right now, that income more than justified current share prices.

I’ll be writing to you next month with some more small-cap dividend plays. Until then, happy investing.

Sincerely,
Jim Nelson

February 23, 2010

Jim Nelson

Jim Nelson began his investing career during the tech boom at age 14 – with purchases of Starbucks and AOL. Early inspiration came from an old Tweedy Brown whitepaper: “What Works in the Market.” He graduated with a degree in Political Science from Pittsburgh University, Nelson focuses on income investing, including dividends, covered calls, and fixed-income. Additionally, he covers MLPs, ADRs, utilities, consumer staples and tobacco. Nelson is the managing editor of Lifetime Income Report.

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