Expand Your Income With These 3 Trusts

Article Excerpt

The main drawback to most income and royalty trusts is that many of them contain low quality assets. We aim to zero in on trusts with high quality assets that provide stable cash flows and distributions. Even the best trusts, such as these three, are still highly cyclical. However, we feel they will continue to pay above-average yields, even after Ottawa starts taxing trust distributions in 2011. Investors should limit their income trust holdings to no more than 15% of their overall portfolio. FORDING CANADIAN COAL TRUST $71 (Toronto symbol FDG.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 148.7 million; Market cap: $10.6 billion; SI Rating: Average) is one of the world’s leading producers of metallurgical coal, a key ingredient in steelmaking. It came into existence as part of the break-up in October 2001 of the old Canadian Pacific holding company, rather than a new issue from a broker. Fording’s reserves should last 25 years at current production rates. Fording’s main asset is its…