Both of the US royalty trusts in the Growth Portfolio trade substantially above our buy targets.

SandRidge Mississippian Trust I (NYSE: SDT) has gained more than 60 percent since we added the stock to the Portfolio on Oct. 6, 2011. The current price of $36.50 per unit is well beyond our buy target of $30 per unit. Meanwhile, units of Chesapeake Granite Wash Trust (NYSE: CHKR) trade above our buy target of $25 and have returned almost 50 percent since we highlighted the stock on Nov. 23, 2011.

Although both oil and gas trusts remain attractive investments for income seekers, investors should hold off on buying either stock until the prices dip below our buy targets. Heed the old Wall Street saw that bulls make money, bears make money, and pigs get slaughtered; if you’re sitting on substantial gains in these recommendations, consider taking some profits off the table.

Rather than selling your entire position in either trust, sell one-third to half your units of SandRidge Mississippian Trust I and Chesapeake Granite Wash Trust. Such a move would harvest some of your profits while retaining exposure to any further upside.

Although the stock market has rallied since thus far in 2012, investors should expect a pullback at some point this year; such a correction would likely offer investors an opportunity to buy these trusts at prices below our buy targets.

Both trusts rallied substantially after announcing distributions well above their target levels for the fourth quarter.

SandRidge Mississippian Trust I announced a quarterly payout of $0.790905 per unit, roughly 26 percent more than the targeted distribution and comfortably above its incentive distribution level. Chesapeake Granite Wash announced a payout of $0.7277 per unit, about 7 percent above the target laid out in the prospectus. Investors unfamiliar with the concept of the target and incentive distribution levels should check out the Oct. 6, 2011, issue of The Energy Strategist, The Yield Issue.

These higher-than-projected distributions stem from higher oil prices relative to the forecasts in the trusts’ registration statements. SandRidge Mississippian Trust I also appears to be drilling the 123 developmental wells required under the terms of the trust agreement at a faster-than-expected pace: As of Nov. 30, 2011, the trust had already drilled 48.9 of its 123 wells. In other words, the sponsor has drilled almost 40 percent of the required wells.

I’m adding a third trust the Growth Portfolio: SandRidge Permian Trust (NYSE: PER) rates a buy under 26.This trust will also replace Chesapeake Granite Wash Trust in my Best Buys list. The Nov. 23, 2011, issue of The Energy Strategist, Royalty Trusts: Buys and Sells, analyzes this trust in detail.

SandRidge Permian Trust offers everything I look for in an oil and gas trust: The vast majority of the trust’s production is oil; the trust has significant near-term hedges against commodity prices; the trust has a subordinated-unit structure that protects unitholders’ distributions over the next few years; and the trust is scheduled to drill 888 low-risk, developmental wells that will keep distributions rising over the next few years. The parent, SandRidge Energy (NYSE: SD), also sponsors SandRidge Mississippian Trust I.

The trust will disburse $0.553523 per unit for the fourth quarter. This payout is about 12 percent above the trust’s target. I expect elevated oil prices to boost the trust’s distribution in coming quarters. Based on current prices and my forecast for the trust’s next four quarterly distributions, the units should yield almost 11 percent. Buy SandRidge Permian Trust under 26.

Investors should also continue to buy Mid-Con Energy Partners LP (NSDQ: MCEP), a master limited partnership (MLP) profiled in the most recent issue of The Energy Strategist. This MLP offers similar tax advantages and income potential. Buy Mid-Con Energy Partners LP under 24.