When you talk about oil stocks, you generally differentiate between service companies, drillers and the integrateds. What about the royalty trusts and their high dividends? Are they a safe income play?-- Don from Connecticut James J. Cramer: Yes and no. These stocks, such as BP Prudhoe Bay ( BPT - Get Report) and San Juan Basin ( SJT - Get Report) pay out hefty dividend yields, but the current payments may not be sustainable. The companies generally pay out a fixed portion of their earnings as dividends and have a fixed amount of assets. Ultimately, the trust will run out of oil or natural gas and the stock will be worth nothing. Before this happens, most trusts usually sell new shares to purchase new land and drilling rights, even though it dilutes existing shareholders. The trusts can be a good investment, but just make sure you understand how they work first. Remember that a 10% dividend is not so attractive if the underlying stock happens to fall 15% over the course of a year.
Does using a market order cost more? Can I save trading commissions by using limit orders?-- Brent from California James J. Cramer: No. Most brokers these days charge the same amount for both kinds of trades. And if there is a difference, the market order is generally cheaper.
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