an rrsp

FORDING CANADIAN COAL TRUST $92.55 (Toronto symbol FDG.UN; SI Rating: Average) — recently accepted a cash-and- stock offer from Teck Cominco worth about $96 a unit. The deal should close in October, 2008. Note though that unlike most takeovers, Revenue Canada will treat the entire proceeds as ordinary income....

Is it a good time to bargain hunt for Canadian income trusts? According to one school of thought, Ottawa’s planned 2011 removal of income trusts’ tax advantages has unduly rattled investors and spurred unwarranted selling. That’s the kind of assumption that makes sense, but it’s unlikely to make you any money. Tax-law changes are a drawback for some investors in Canadian income trusts. But the key problem with income trusts is their general lack of investment quality....

Two of our long-time recommendations — Transalta Corp. $37 (Toronto symbol TA; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 199.0 million; Market cap: $7.4 billion; SI Rating: Average) and...

BCE INC. $35.72 (Toronto symbol BCE; SI Rating: Above-Average) has deferred declaring its second-quarter quarter common share dividend of $0.365 a share. That will save the company $294 million. BCE feels that holding on to the cash will make the $42.75-a-share takeover price more attractive to the buyers. The buyers may wind up paying less for BCE in the wake of tighter bank lending and lower stock markets. But if the dividend deferral pushes up the ultimate price, and you hold your shares outside an RRSP, you will wind up better off — the tax rate on the capital gains you’ll realize on the takeover is less than the tax you would have paid on the dividend....

BCE INC. $35.15, Toronto symbol BCE, has deferred declaring its second quarter common share dividend of $0.365 a share. That will save the company $294 million. BCE feels holding on to the cash will help make the $42.75-a-share takeover price more attractive to the buyers. The buyers may wind up paying less for BCE in the wake of tighter bank lending and lower stock markets. But if the dividend deferral pushes up the ultimate price, and you hold your shares outside an RRSP, you will wind up better off — the tax rate on the capital gains you’ll realize on the takeover is less than the tax you would have paid on the dividend. BCE is still a buy....

FORT CHICAGO ENERGY TRUST $10.89 (Toronto symbol FCE.UN; SI Rating: Extra Risk) owns 50% of the Alliance Pipeline, a 36-inch diameter natural gas pipeline. 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 two partners are 85.4% of the Aux Sable natural gas liquids plant. Fort Chicago also owns the 1,324-kilometre Alberta Ethane Gathering System. Through recently acquired Countryside Power, Fort Chicago now also owns and operates energy systems in Charlottetown, PEI, and London, Ontario, plus two gas-fired cogeneration plants in California. In the three months ended December 31, 2007, Fort Chicago’s revenues rose 25.7%, to $173.3 million from $137.8 million a year earlier. Cash flow per unit rose 34.4% in the quarter, to $0.43 from $0.32....

BELL ALIANT REGIONAL COMMUNICATIONS INCOME FUND $28.75 (Toronto symbol BA.UN: SI Rating: Above average) is the main provider of telephone services in Atlantic Canada. It also serves rural parts of Ontario and Quebec. As part of the deal that created Bell Aliant, the fund transferred the bulk of its wireless business to BCE. Without these operations, the fund now aims to spur growth by expanding the availability and capacity of its high-speed Internet service. Just 20% of Bell Aliant’s customers use its high-speed Internet service, so there’s plenty of room to grow. In the three months ended September 30, 2007, Bell Aliant earned $0.48 a unit from continuing operations in its second quarter. The fund took its present form on July 7, 2006, so it did not report earnings for the year-earlier quarter. But revenue on a pro forma basis, which assumes Bell Aliant began operations at the start of 2006, grew 1.6%, to $837.9 million from $825.1 million....

GREAT LAKES HYDRO INCOME FUND $20.30 (Toronto symbol GLH.UN; SI Rating: Extra Risk) owns 26 hydroelectric generating stations located on seven river systems in four distinct geographic regions: Quebec, Ontario, British Columbia and New England. Its facilities have 1,015 megawatts of generating capacity. In the three months ended March 31, 2007, Great Lakes’ revenues fell 1.2%, to $48.2 million from $48.8 million. Cash flow per share fell 3.8%, to $0.51 from $0.53. Power generation in British Columbia was lower due to an overhaul on an operating unit at the Lois facility. Total power generated was slightly lower than in the 2006 quarter, when water inflows were unusually strong....

FORT CHICAGO ENERGY TRUST $10.82 (Toronto symbol FCE.UN; SI Rating: Extra Risk) owns 50% of the Alliance Pipeline, a 36-inch diameter natural gas pipeline. 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 two partners are 85.4% of the Aux Sable natural gas liquids plant. Fort Chicago also owns the 1,324-kilometre Alberta Ethane Gathering System. In the three months ended September 30, 2006, Fort Chicago’s revenues fell 38.8%, to $137.2 million from $227.8 million a year earlier. However, the lower revenue was due to a change in the method of accounting for Aux Sable’s sales. Cash flow per unit rose 36.1% in the quarter, to $0.49 from $0.36. Fort Chicago’s units yield 8.6%. U.S. dividends paid in an RRSP are not subject to withholding taxes. Outside an RRSP, you may need to submit extra paperwork at tax time, as around 40% of the monthly $0.0775 distribution is considered U.S. source dividend income. Dividends from U.S. sources sent to Canadians are subject to a withholding tax — usually 15%. However, if you hold the trust outside an RRSP, in most cases, you get a Canadian income tax credit to offset that tax....

A question investors often ask at this time of year is “What role should bonds play in my RRSP?” If you’re going to hold bonds, an RRSP is a good place for them. That’s because bond interest lacks any tax advantages, unlike dividends from Canadian companies, which carry the dividend tax credit. Bonds usually have fixed maturity dates as well, so you can’t defer capital gains indefinitely, as you can with stocks. But the bigger question is this: should you hold any bonds at all? Holding a mix of bonds and stocks will reduce the volatility of your portfolio over long periods. But it will also cut the long-term return on your portfolio, especially with bond yields as low as they are today....