income trust

CHEMTRADE LOGISTICS INCOME FUND (Toronto symbol CHE.UN; www.chemtradelogistics.com) is one of North America’s largest providers of removal services for resource firms, such as oil refineries and base-metal processors. These companies create sulphur, acid and other by-products as part of their activities. Chemtrade converts these substances into useful chemicals, like sulphuric acid....

CHEMTRADE LOGISTICS INCOME FUND $15.49 (Toronto symbol CHE.UN; TSINetwork Rating: Speculative) (416-496-5856; www.chemtradelogistics. com; Units outstanding: 41.7 million; Market cap: $645.9 million; Dividend yield: 7.8%) is one of North America’s largest providers of removal services for resource firms, such as oil refineries and base-metal processors. These companies create sulphur, acid and other by-products as part of their activities. Chemtrade converts these substances into useful chemicals, like sulphuric acid. In June 2011, Chemtrade bought Marsulex Inc. for $419.5 million. Marsulex provides a range of environmental services, including improving air quality and treating and handling industrial waste. In the three months ended September 30, 2012, Chemtrade’s revenue fell 10.3%, to $240.9 million from $268.5 million a year earlier. Cash flow per unit fell 25.0%, to $0.72 from $0.96. However, the decline was mostly due to a one-time accounting charge. The 2011 quarter was also particularly strong....

CHEMTRADE LOGISTICS INCOME FUND $15.49 (Toronto symbol CHE.UN; TSINetwork Rating: Speculative) (416-496-5856; www.chemtradelogistics. com; Units outstanding: 41.7 million; Market cap: $645.9 million; Dividend yield: 7.8%) is one of North America’s largest providers of removal services for resource firms, such as oil refineries and base-metal processors. These companies create sulphur, acid and other by-products as part of their activities. Chemtrade converts these substances into useful chemicals, like sulphuric acid.

In June 2011, Chemtrade bought Marsulex Inc. for $419.5 million. Marsulex provides a range of environmental services, including improving air quality and treating and handling industrial waste.

In the three months ended September 30, 2012, Chemtrade’s revenue fell 10.3%, to $240.9 million from $268.5 million a year earlier. Cash flow per unit fell 25.0%, to $0.72 from $0.96. However, the decline was mostly due to a one-time accounting charge. The 2011 quarter was also particularly strong.

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Canada’s real estate investment trusts (REITs) were the only category of trusts exempted from the federal government’s income trust tax. This has helped them remain popular with investors seeking both income and capital gains. Today we look at a major Canadian REIT that continues to add to its shopping centre empire, in the U.S. as well as Canada. RIOCAN REAL ESTATE INVESTMENT TRUST (Toronto symbol REI.UN; www.riocan.com) is Canada’s largest real estate investment trust (REIT). It has interests in 278 shopping malls in Canada, including 10 under development. These properties contain over 59 million square feet of leasable area....

Government Properties Income Trust, $23.64, symbol GOV on New York (Units outstanding: 47.1 million; Market cap: $1.1 billion; www.govreit.com), is a real estate investment trust (REIT) that gets about two-thirds of its revenue by leasing office space to the U.S. federal government. State governments rent another 20% of its offices, and the United Nations leases 5%. Most of the REIT’s properties are in California, Maryland, New York, Georgia, Massachusetts and Washington, D.C. In the three months ended June 30, 2012, Government Properties’ revenue rose 19.4%, to $50.3 million from $42.1 million a year earlier. Cash flow rose 15.8%, to $24.4 million from $21.0 million. Cash flow per unit was unchanged from $0.52 because the REIT issued more units to pay for recent acquisitions. These acquisitions included: two office properties located in Everett, Washington leased to the State of Washington and occupied by the Department of Social and Health Services for $20.4 million; and an office property in Albany, New York leased to the State of New York and occupied by the Department of Agriculture for $8.5 million....

Liquor Stores N.A. Ltd., $18.73, symbol LIQ on Toronto (Shares outstanding: 22.9 million; Market cap: $428.9 million; www.liquorstoresna.com), is North America’s largest private liquor store operator, with 242 outlets. Of that total, 176 are in Alberta, 35 are in B.C., 20 are in Alaska and 11 are in Kentucky. Liquor Stores’ banners include Liquor Depot, Liquor Barn and Brown Jug. Alberta privatized retail liquor sales in 1993, prompting Irv Kipnes to found Liquor Depot and Henry Bereznicki to start Liquor World that year. Kipnes and Bereznicki, both Edmonton-based real estate developers, merged their companies and founded Liquor Stores Income Fund in 2004. The fund first sold units to the public at $10 and began trading on Toronto in September 2004. Liquor Stores Income Fund converted to a regular corporation on December 31, 2010, in response to Ottawa’s income trust tax....

Pat McKeough responds to many personal questions on specific stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for the Inner Circle. This past week, an Inner Circle asked us about one of the handful of companies (outside of REITs) that has remained an income trust. This auto repair firm has undertaken a program of rapid growth that involves buying up smaller shops and chains. Pat assesses the pros and cons of this aggressive strategy. Q: Dear Pat: What do you think about Boyd Group Income Fund? Could you please give me your insight and recommendation? Thank you....

You might say we specialize in “plain vanilla” stocks, bonds and mutual funds—the ordinary kind, in other words, without any special features. We almost always stay out of new issues. We’ve always been highly selective in our income trust and royalty trust recommendations. We advise against trading in options and futures. The only investment innovation we’ve added to our list is the exchange-traded fund or ETF. But ETFs are unlike other investment innovations; they aim to simplify your investing, rather than complicate it. Of course, we stay out of ETFs that use leverage, or that aim to pursue some sort of market theory, or that invest in a narrow market segment or theme. We’ve found that our exclusionary rules leave us plenty of scope for sound investing, with lots of high-value opportunities and few surprises. In investment innovations, surprises tend to be unpleasant. That’s because innovations aim at selling more “product” (as brokers say) to investors, rather than raising investor returns. In fact, innovations may give you greater stability, steady income or tax deferral, but you generally pay for these advantages out of total investment return....

Northland Power Inc., $18.66, symbol NPI on Toronto (Shares outstanding: 84.4 million; Market cap: $1.6 billion; www.northlandpower.ca), owns interests in power projects that together generate over 1,005 megawatts of electricity. These include natural-gas-fired plants and renewable wind and biomass projects. The company sells almost all of its power under long-term contracts with a current average duration of 13.6 years. Northland also has 320 megawatts of power capacity under construction, including a $677-million, 260-megawatt natural-gas-fired plant in North Battleford, Saskatchewan, that’s due to start up in mid-2013. The company has already sold this plant’s power under a 20-year contract. In addition, Northland has a further 280 megawatts of wind, solar and run-of-river hydro projects at an advanced stage of development. This power, too, has already been sold under long-term deals. Northland converted from an income trust to a corporation on January 1, 2011....

Canexus Corp., $7.64, symbol CUS on Toronto (Shares outstanding: 121.0 million; Market cap: $924.4 million; www.canexus.ca), produces sodium-chlorate and chlor-alkali products, largely for the pulp and paper and water-treatment industries. The company’s six plants—four in Canada and two at one site in Brazil—aim to use nearby low-cost electricity and transportation facilities to cut their production and delivery costs. Canexus also provides “transloading” services (transfers of oil and gas by-products, such as butane, from railcars to trucks) to the oil and gas industry from its terminal at Bruderheim, Alberta. Canexus was formerly a division of Nexen Inc. (symbol NXY on Toronto). It converted its corporate structure and began trading as an income trust, on August 18, 2005, at $10 per unit. Canexus turned itself into a conventional corporation in July 2011....