income trust
ARC RESOURCES $25.52 (Toronto symbol ARX; Shares outstanding: 287.6 million; Market cap: $7.3 billion; TSINetwork Rating: Speculative; Dividend yield: 4.7%; www.arcresources.com) produces oil and gas in western Canada. Its average daily production of 85,178 barrels of oil equivalent is weighted 67% to gas and 33% to oil. In the three months ended September 30, 2011, ARC’s cash flow per share rose 17.5%, to $0.74 from $0.63. That’s because the company raised its production. It also benefited from higher oil prices. ARC converted from a trust to a corporation on January 1, 2011, in response to Ottawa’s income-trust tax. However, ARC has $2.2 billion of tax pools that are letting it offset the tax and maintain its $0.10 monthly payout (it now yields 4.7%)....
Inter Pipeline Fund, $18.75, symbol IPL.UN on Toronto (Units outstanding: 264.1 million; Market cap: $5.0 billion; www.interpipelinefund.com), transports, stores, markets and processes oil and natural gas. The fund has three divisions: pipelines transports 35% of Canadian oil sands production and 15% of western Canadian conventional crude oil; extraction processes 40% of Alberta’s exported natural gas into natural gas liquids; and the storage division, which operates under the Simon Storage and TLG banners. In the three months ended September 30, 2011, Inter Pipeline’s revenue rose 30.4%, to $302.1 million from $231.7 million a year earlier. Cash flow per unit jumped 43.3%, to $0.43 from $0.30. That’s mainly because the company’s pipelines shipped 993,300 barrels a day in the quarter, up 24.6% from 797,300 barrels a year earlier. The increased volumes came mostly from a $1.8-billion expansion of the fund’s Corridor pipeline, which was completed in January 2011....
All of our real estate investment trust (REIT) recommendations are up this year, despite volatile markets. That’s partly because REITs are exempt from Ottawa’s income trust tax, which came into effect on January 1, 2011. That makes REITs’ high yields attractive, because many other trusts have converted to corporations or cut their distributions. Even with their gains, we think our REIT picks still offer strong long-term returns with lower risk. ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $23.93 (Toronto symbol AP.UN; Units outstanding: 49.2 million; Market cap: $1.2 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.5%; www.alliedpropertiesreit.com) owns office buildings in Toronto, Montreal, Quebec City and Winnipeg. These mainly Class I properties contain over 7.8 million square feet of leasable area....
CRESCENT POINT ENERGY CORP. $44.35 (Toronto symbol CPG; Shares outstanding: 277.9 million; Market cap: $12.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.2%; www.crescentpointenergy.com) produces oil and natural gas in western Canada. Its production is weighted 90% toward oil and 10% to gas. The company continues to focus on its Bakken light-oil development in southeastern Saskatchewan. For all of 2011, Crescent Point will likely spend at least $1.1 billion on exploration at Bakken. That should rise even higher in 2012. In the three months ended September 30, 2011, Crescent Point’s cash flow per share rose 19.8%, to $1.09 from $0.91....
PEMBINA PIPELINE $29.75 (Toronto symbol PPL; Shares outstanding: 167.3 million; Market cap: $5.0 billion; TSI Network Rating: Extra Risk; Dividend yield: 5.2%; www.pembina.com) owns pipeline systems with a total length of over 7,500 kilometres. These lines pump oil and gas from fields in B.C. and Alberta to refineries, or feed into major pipelines, such as the Enbridge Pipeline System. Pembina also owns the Syncrude, Horizon and Cheecham pipelines, which pump crude oil from the Alberta oil sands. In addition, the company holds a 50% stake in the Fort Saskatchewan Ethylene Storage Limited Partnership. It also owns the Cutbank Complex, a network of natural gas gathering and processing facilities. In the three months ended September 30, 2011, Pembina’s cash flow rose 57.0%, to $84.8 million, or $0.51 a share, from $54.0 million, or $0.33 a share, a year earlier. That’s because producers shipped more oil and gas through Pembina’s pipelines....
TransForce Inc., $12.87, symbol TFI on Toronto (Shares outstanding: 96.5 million; Market cap: $1.2 billion; www.transforcecompany.com), is a leading Canadian trucking company. Its fleet is the largest in the country, with 10,500 trucks and 11,300 trailers. The company also has exclusive partnerships that extend its reach into the U.S. Montreal-based TransForce was an income trust from September 2002 to May 2008. It has four main divisions:...
DUNDEE REIT $32.70 (Toronto symbol D.UN; TSINetwork Rating: Speculative) (416-365-3535; www.dundeereit.com; Shares outstanding: 58.9 million; Market cap: $1.9 billion; Dividend yield: 6.7%) owns and manages 18.9 million square feet of office, industrial and retail space. The trust has a 95.8% occupancy rate. In the three months ended September 30, 2011, Dundee’s revenue rose 75.4%, to $110.9 million from $63.2 million a year earlier. Most of the increase came from properties the trust recently purchased. Dundee’s cash flow rose 69.4% in the latest quarter, to $36.6 million from $21.6 million. Cash flow per unit rose just 11.5%, to $0.58 from $0.52, due to more units outstanding (the trust issued new units to pay for the acquired properties)....
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 examine the expansion plans of the largest of those trusts, a specialist in shopping malls. RIOCAN REAL ESTATE INVESTMENT TRUST $25 (Toronto symbol REI.UN; www.riocan.com) is the largest of Canada’s REITs. It specializes in big-box-style outdoor malls, and owns 314 retail properties, 10 of which are under development. Most are in suburban areas, where land is generally cheaper than in towns and cities....
Ag Growth International Inc., $31.95, symbol AFN on Toronto (Shares outstanding: 15.1 million; Market cap: $482.4 million; www.aggrowth.com), is a leading maker of portable and stationary grain-handling, storage and conditioning equipment. The company is based in Winnipeg. Ag Growth sells its products through dealers and distributors in 48 states and nine provinces, as well as in overseas markets, including Russia, Ukraine and Kazakhstan. Ag Growth gets about 60% of its sales from the U.S., followed by Canada (23%) and overseas (17%). The company started out as an income trust. It first sold units to the public at $10 each, and began trading on Toronto in May 2004. In June 2009, it converted to a conventional corporation and changed its name from Ag Growth Income Fund to the present form....
PEYTO EXPLORATION & DEVELOPMENT CORP. (Toronto symbol PEY; www.peyto.com) continues to generate higher cash flow. And it’s reinvesting that cash flow to expand production in order to deliver greater returns for its shareholders. The company produces and explores for oil and natural gas in Alberta. Peyto’s average daily production of 34,443 barrels of oil equivalent (including natural gas) is weighted 89% toward gas and 11% to oil....
