Royal Gold, Inc. (RGLD)

Royal Gold pays miners up front for a share of future gold output — and digs nothing itself.

A mine needs money to build, and raising it through debt or equity is expensive. The company provides capital now in exchange for the right to take part of the output at a pre-agreed low price, or a percentage of the mine's revenue. It owns no equipment, employs no miners and pays nothing for fuel or explosives.

Hence the key property: when the gold price rises income rises with it, and when mining costs rise it does not suffer, because the miner bears them. The portfolio spans dozens of mines so that an accident at one does not decide the company's fate. Risks: the gold price, the pace of development on other people's sites and the quality of new deals. A dividend is paid and raised.