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By Paul Tracy

Without a doubt, it's our most popular piece of research. Each year we publish our annual "Top 10 Stocks" list. Put simply, these are the 10 stocks my research staff and I think have the best chance of beating the market in the coming year.

We've published this annual list since 2003. And over the years, literally tens of thousands of investors have read -- and profited -- from the advice.

There's a good reason why this research is so popular year-in and year-out.

In our inaugural edition in 2003 our top picks ideas beat the S&P 500 (NYSEARCA:SPY) by 12.0 percentage points in the course of the year. And then came 2004... 2005... 2006... 2007... 2009... and 2010 -- our Top 10 Stocks trounced the overall market in those years as well.

In fact, through 2010 (2011 results haven't been finalized yet) this annual list has returned 16.8% on average each year... compared with 7.8% for the S&P 500. And if you look at the compounded returns, then we're beating the S&P 157.1% to 55.5%. That's more than 101 percentage points.

With this performance in mind, I wanted to share a sneak peek into our Top 10 Stocks for 2012.

A stake in dozens of oil wells... and a double-digit yield

SandRidge Mississippian Trust (NYSE: SDT) has only one mission -- take in royalties and pay them out to investors.

As a royalty trust, SDT owns a stake in dozens of wells run by its parent company, SandRidge Energy (NYSE: SD). SandRidge Energy takes care of the drilling, production, marketing, and selling of the oil and gas produced (production is split roughly 50/50 between oil and gas). The royalty trust -- SDT -- is passive in the relationship. It doesn't have to do a thing. In return for the initial investment when it went public, its investors get a cut of all the oil and natural gas sold from the wells.

For the Mississippian Trust, SandRidge Energy packaged a 90% interest in 37 of its oil and natural gas wells in Oklahoma. In other words, for every dollar in oil or gas pumped by these more than three dozen wells, owners of the royalty trust are now entitled to 90 cents in royalties.

But that's just the start...

That's because in addition to the 37 wells it owned at its inception, the trust also gets a bonus. Between its inception in December 2010 and December 2015, parent company SandRidge must drill an additional 123 wells, of which SDT will own a 50% stake.

In other words, in the next several years, each unit of this trust will have a stake in an increasing number of wells. And there is a powerful incentive in place for the parent company to get those wells drilled... and increase distributions... sooner rather than later.

As is common practice, SandRidge Energy retained ownership of over 10 million of the 28 million outstanding units of SDT. But most of those (7 million units) are subordinated shares. Unlike the shares we're investing in, those subordinated shares don't receive dividends unless regular common unitholders get a predetermined minimum payment each quarter. If the distribution falls below that threshold, then the payments to the subordinated shares will be reduced to make up the difference to the regular units.

That means these shares have a built-in buffer to ensure we see strong distributions going forward.

In the latest quarter, SDT paid a distribution of $0.82 per unit, giving a forward yield of 11.1% at today's price.

Shares of SDT have run-up in the past few weeks, but I think the high yield still makes the shares attractive at these levels. But if you're a more conservative investor, then waiting for a pullback before buying isn't a bad idea.

[Note: One stock has raised dividends 110% in five years... another has $8.25 per share in cash (45% of its share price)... another yields 8.0% while it has nearly doubled its net income year-over-year. These are the type of investments that make up my Top 10 Stocks for 2012 report.

To learn more about these top picks for the coming year, visit this link.]

Disclosure: Paul Tracy and/or StreetAuthority, LLC hold a position in SDT.

Source: A Top 10 Stock For 2012 Yielding 11.1%