FORT CHICAGO ENERGY TRUST $11.88 (Toronto symbol FCE.UN; SI Rating: Extra Risk) owns 50% of the Alliance Pipeline, a 36-inch diameter natural gas pipeline with a capacity of 1,550 million cubic feet per day. It extends 3,000 kilometres from Fort St. John in B.C. to Chicago, Illinois. Enbridge Inc. owns the other 50% interest. The other assets held by the …read more »

In evaluating investments, many investors focus on what we’d call ‘investment outputs’, such as earnings, dividends, cash flow, return on equity, sales growth and so on. These are all important, of course, but you shouldn’t focus on them to the exclusion of what you might call ‘investment inputs’, such as the factors we use in assigning our Successful Investor quality …read more »

BCE INC. $29 (Toronto symbol BCE; SI Rating: Above average) has struggled in the past few years due to increasing competition in its core telephone business, which supplies 40% of its revenue and half of its profit. It also suffers from a “holding company discount”: the current price of the stock is less than the total value of its various …read more »

FPI LTD. $5.80 (Toronto symbol FPL; SI Rating: Extra Risk) fell to $4.05 a share in November 2005 over fears that Ottawa would impose new taxes on income trusts. The uncertainty forced FPI to suspend its trust conversion plan for its Ocean Cuisine International division, which sells seafood to retailers and restaurants. It had hoped to sell part of Ocean …read more »

TRANSALTA CORP. $24 (Toronto symbol TA; SI Rating: Average) operates 49 power plants in Canada, the United States, Mexico and Australia.

In the three months ended December 31, 2005, TransAlta’s revenues rose 22.7%, to $810.1 million from $660.1 million. Ongoing earnings rose 56.5%, to $58.2 million or $0.29 a share, from $37.2 million or $0.19 a share, mainly due to the …read more »

TRANSALTA POWER, L.P. $8.70 (Toronto symbol TPW.UN; SI Rating: Extra risk) owns a 49.99% interest in TransAlta Cogeneration, L.P., which in turn holds interests in five gas-fired cogeneration plants in Ontario, Saskatchewan and Alberta, and in the Sheerness coal-fired plant in Alberta. TransAlta Power has secured long-term contracts for all of its power.

Cogeneration is the simultaneous production of power and …read more »

PENGROWTH ENERGY TRUST (Toronto symbols PGF.A $28 and PGF.B $23; SI Rating: Average) owns all or part of several oil and gas properties in Alberta and B.C. Properties that Pengrowth operates account for 55% of its production. The remaining 45% comes from minority investments in other energy projects, including an 8.4% interest in the Sable Offshore Energy Project south of …read more »

We advise you to use caution when investing in income trusts, and to limit your trust investments to no more than one-sixth of your total portfolio.

Many income trusts, particularly those that have been assembled and sold to the public as new issues in the past few years, come with hidden risks that can eventually hurt their profits and force them …read more »