"Some pundits are calling commodities a bubble that’s about to burst, but I believe global demand for commodities is fundamentally strong," says growth & income expert Bryan Perry.

In his 25% Cash Machine, he adds, "The pullback in commodities prices is a constructive consolidation phase." Now, he looks at Mesabi Trust (NYSE: MSB), a play on iron ore.

"Mesabi Trust is a rare 'Grantor Trust' made up of iron-ore rich lands in Minnesota. Mesabi’s trustees have an agreement with Northshore Mining Company, owned by mining giant Cleveland Cliffs.

"Under the agreement, Northshore mines Mesabi’s lands, extracts the iron ore, converts it into iron pellets and sells them to domestic steel companies like U.S. Steel and Nucor.

"Mesabi receives a stream of royalty payments from the pellet sales, which are paid out as quarterly distributions. With this series of agreements between Mesabi and Northshore, the quarterly payments based on pellet sales are about as simple as a business model can get.

"The royalties paid to the trust are dependent on the volume of shipments for a given quarter and year-to-date, the pricing of the iron ore product sales, and the percentage of iron ore pellet shipments from Mesabi Trust lands.

"The current quarterly dividend implies a forward annual dividend payout of $2.06, or a yield of 8.4%. Given the recent price hikes in steel, I expect the forward distributions to be even higher.

"The fact that the U.S. steel industry is able to hike prices and boost its margins at a time when the economy is flirting with recession seems ironic, but analysts say it’s simply the law of supply and demand at work.

"The steel industry has a structural capacity shortage in North America and importers are not likely to make up the shortfall because of the weaker dollar and rising freight costs. Further, steel inventories in the US could remain abnormally low for a prolonged period, since global production is already operating near capacity.

"You can add in the reality that prices in other countries are higher than in the United States and further depreciation in the dollar makes it more expensive to ship steel here. Taking all this into account, analysts predict strong pricing will extend into 2009 and maybe beyond.

"Mesabi Trust was one of our first cornerstone recommendations when The 25% Cash Machine launched in February 2006. We booked a 65%-plus gain, including dividends, the first time around. Now, after a year of consolidation, the stock is breaking out again.

"As a Master Limited Partnership, MSB pays out about 90% of the net income generated, so as steel prices climb so too will the price of iron ore pellets sold to the steel companies. So let’s ride the steel wave and turn iron ore pellets into glistening profits by buying Mesabi Trust."