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Income Trusts
Features from this Topic
INNERGEX POWER INCOME FUND $10.74 (Toronto symbol IEF.UN; Shares outstanding: 29.4 million; Market cap: $315.8 million; SI Rating: Extra Risk; Dividend yield 9.3%) plans to convert to a corporation by merging with Innergex Renewable Resources (Toronto symbol INE). Innergex Power unitholders will get 1.46 shares of the new company.
The combined company will own 326 megawatts of power capacity, with 128 …read more »
A rebounding global economy should continue to push up resource prices. That will help Canadian income trusts that serve the resource sector, including Precision Drilling Trust (symbol PD.UN on Toronto). Precision provides contract-drilling services to oil and gas producers, mainly in western Canada.
In light of recent developments surrounding Precision, we’ve updated our buy/sell/hold advice on the trust in the current …read more »
Lower oil and natural gas prices weighed on the cash flow and stock prices of these two resource trusts in 2009. However, recent announcements should improve their prospects in 2010.
PENGROWTH ENERGY TRUST $11 (Toronto symbol PGF.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 289.5 million; Market cap: $3.2 billion; Price-to-sales ratio: 1.9; Dividend yield: 7.6%; SI Rating: Average) produces oil …read more »
BELL ALIANT REGIONAL COMMUNICATIONS INCOME FUND $28.28 (Toronto symbol BA.UN: Units outstanding: 127.3 million; Market cap: $3.6 billion; SI Rating: Above Average; Dividend yield: 10.3%) has over 3.1 million telephone customers in Atlantic Canada and rural parts of Ontario and Quebec. BCE owns 44.1% of Bell Aliant.
In the three months ended September 30, 2009, the fund’s earnings rose 6.8%, to …read more »
DUNDEE REIT $19.45 (Toronto symbol D.UN; SI Rating: Speculative) (416-365-3535; www.dundeereit.com; Shares outstanding: 21.2 million; Market cap: $412.7 million; Dividend yield: 11.3%) owns and manages 6.7 million square feet of office, industrial and retail space, including 43 office buildings and 34 industrial properties. GE Real Estate owns a 15% voting interest in Dundee REIT, and Dundee Corp. owns 21%.
Dundee reported …read more »
PRT FOREST REGENERATION INCOME FUND $1.91 (Toronto symbol PRT.UN; SI Rating: Speculative) (250-381-1404; www.prtgroup.com; Shares outstanding: 9.7 million; Market cap: $18.5 million; Dividends suspended in January 2009) is the largest producer of container-grown forest seedlings in North America. It grows its seedlings in 12 greenhouses and open outdoor compounds.
In the three months ended September 30, 2009, PRT’s revenue dropped 19.6%, …read more »
Ottawa’s new tax on income trusts comes into effect just over a year from now, on January 1, 2011. When it does, it will put trusts on an equal footing with regular corporations.
Right now, trusts pay out a high percentage of their cash flows to their unitholders. This lets them avoid paying corporate taxes. It also gives many of …read more »
FORT CHICAGO ENERGY PARTNERS L.P. $10.05 (Toronto symbol FCE.UN; Units outstanding: 137.9 million; Market cap: $1.4 billion; SI Rating: Extra Risk) has announced that it plans to convert to a dividend-paying corporation before Ottawa starts taxing income trusts on January 1, 2011. The trust’s conversion will likely take place in the fourth quarter of 2010.
Fort Chicago owns and operates energy …read more »
INNERGEX POWER INCOME FUND $9.95 (Toronto symbol IEF.UN; Shares outstanding: 29.4 million; Market cap: $292.6 million; SI Rating: Extra Risk) owns interests in 10 hydroelectric power plants in Quebec, Ontario, British Columbia and Idaho, as well as two wind farms in Quebec.
The company’s hydroelectric plants in Quebec are at La Chaudiere, Saint-Paulin, Montmagny and Windsor. There are also three facilities …read more »
PRECISION DRILLING TRUST $6.70 (Toronto symbol PD.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 275.6 million; Market cap: $1.8 billion; Price-to-sales ratio: 1.3; SI Rating: Extra Risk) provides contract-drilling services to oil and gas producers. Its clients are located in western Canada, the U.S. and Mexico. The trust owns a fleet of 388 drilling rigs.
Precision has been able to avoid …read more »
Income Trusts
Income trusts are investments that hold income-producing assets. Their units trade on stock exchanges, but they flow much of their income through to unitholders as “distributions.” This means many trusts pay little or no tax, though the Canadian government plans to begin taxing trust distributions in 2011. Investing in trusts can be risky, as the businesses that underpin them may have steady cash flow, but could stagnate as the economy changes. Pat McKeough believes investors should look for trusts with low capital expenditures and mature businesses.
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