income trust
ZARGON OIL & GAS $21.61 (Toronto symbol ZAR; TSINetwork Rating: Speculative) (403-264-9992; www.zargon.ca; Shares outstanding: 23.8 million; Market cap: $513.5 million; Dividend yield: 7.8%) is the new name of Zargon Energy Trust following its conversion to a dividend-paying corporation on January 7, 2011. The move is in response to Ottawa’s new tax on income trust distributions, which came into effect on January 1, 2011. Zargon must now pay corporate taxes. As a result, it plans to lower its monthly dividend by 22.2%, to $0.14 a share, with the February 2011 payment. That will give the stock a 7.8% yield. The company produces oil and natural gas in Alberta, Manitoba, Saskatchewan and North Dakota. Its output is weighted 58% to oil and 42% to natural gas. This diversification helps cut its risk....
PLEASE NOTE: Next week, Stock Pickers Digest will reveal its #1 pick for 2011. Don’t miss this unique opportunity to profit. ZARGON OIL & GAS LTD., $21.90, symbol ZAR on Toronto, is the new name of Zargon Energy Trust following its conversion to a dividend-paying corporation on January 7, 2011. The move is in response to Ottawa’s new tax on income trust distributions, which came into effect on January 1, 2011. Zargon must now pay corporate taxes. As a result, it plans to lower its monthly dividend by 22.2% with the February 2011 payment. That will give the stock a 7.7% yield....
Ottawa’s new tax on income trusts came into effect nine days ago, on January 1, 2011. The new tax puts income trusts on an equal footing with regular corporations. Some income trusts converted to conventional corporations before the new tax came into effect, or plan to do so in the coming months. Others will continue to operate as trusts. (In light of the new tax, we’ve analyzed some trusts that may be appropriate for income-seeking investors in a just-published issue of Canadian Wealth Advisor, our newsletter for conservative investing. One of these trusts has made a number of big investments in wind power. Read on for further details.)...
SCITI Trust, $13.53, symbol SIN.UN on Toronto, (Shares outstanding: 15.3 million; Market cap: $206.8 million; www.scotiamanagedcompanies.com) first issued units at $10, and began trading on Toronto in April 2003. It was scheduled to wind up on April 29, 2008. However, unitholders voted in March 2008 to continue the trust. SCITI Trust is now scheduled to wind up on August 13, 2013. Unitholders also voted to change the trust’s investment mandate. Previously, SCITI Trust’s portfolio consisted of the 100 largest income trusts by market capitalization included in the Scotia Capital Income Trust Index. The trust’s portfolio is now based on a new index, the Scotia Capital High Yielding Equity Index (the “Scotia HYE Index”). This index tracks the highest-yielding stocks and income trusts on the Toronto exchange. The trust now holds the top 50 highest-yielding issues in the Scotia HYE Index, on an equal-weight basis....
The Data Group Income Fund, $6.45, symbol DGI.UN on Toronto (Units outstanding: 23.5 million; Market cap: $151.5 million; www.datagroup.ca), sells commercial-printing and related services to a variety of customers, including Canada Post, Bell Canada, Manulife Financial Corp., Bank of Montreal, Imperial Oil, Ontario Lottery and Gaming Corp. and British Columbia Lottery Corp. By outsourcing their printing needs to Data Group, the fund’s clients can focus on their main businesses and improve their efficiency. Data Group has three divisions:...
Pizza Pizza Royalties Income Fund, $8.18, symbol PZA.UN on Toronto (Units outstanding: 21.8 million; Market cap: $178.5 million; www.pizzapizza.ca), holds certain trademarks and trade names used by Pizza Pizza restaurants in Canada. The trademarks are licensed to Pizza Pizza for 99 years. In return, Pizza Pizza pays the fund 6% of the revenues of Pizza Pizza restaurants (9% on Pizza 73 restaurants). There are currently 590 Pizza Pizza and 81 Pizza 73 restaurants....
INTACT FINANCIAL CORP. $50.86 (Toronto symbol IFC; SI Rating: Speculative) (416-341-1464; www.intactfc.com; Shares outstanding: 113.0 million; Market cap: $5.7 billion; Dividend yield: 2.7%) is Canada’s largest provider of property and casualty insurance, based on premiums. Its brands include Intact Insurance, Canada BrokerLink, belairdirect and Grey Power. Intact has two product lines: Its personal products, which contribute 70% of its premiums, include automobile and property insurance that Intact sells to individuals. Commercial products provide the remaining 30% of premiums, and include auto, property, liability, surety and specialty coverage that Intact mainly sells to small- and medium-sized businesses. In the three months ended September 30, 2010, Intact earned $0.72 a share. That’s a big improvement over the $0.07 a share it lost a year earlier. Revenue rose 6.2%, to $1.19 billion from $1.12 billion....
A rebounding global economy continues to push up resource prices. That has helped raise the prices of Canadian oil stocks and companies that serve them, including Precision Drilling Corp. (symbol PD on Toronto). Precision provides contract-drilling services to oil and natural gas producers, mainly in western Canada. Precision recently converted from an income trust to a conventional corporation. The Canadian oil stock’s investors received one common share for each trust unit they held. In light of that and other changes at the company, we’ve updated our buy/sell/hold advice on Precision in the current issue of The Successful Investor. (Read on to find out how you can get a free copy of this issue. Along with our latest buy/sell/hold advice on Precision, the issue contains our full analysis of 19 other investments that could be suitable for your portfolio.)...
PRECISION DRILLING CORP. $9.04 (Toronto symbol PD; Aggressive Growth Portfolio, Resource sector; Shares outstanding: 275.7 million; Market cap: $2.5 billion; Price-to-sales ratio: 1.9; No dividends paid since February 2009; TSINetwork Rating: Extra Risk; www.precisiondrilling.com) provides contract-drilling services to land-based oil and gas producers. Precision owns 353 drilling rigs, including 202 in Canada, 148 in the U.S. and three in Mexico and other countries. Precision recently converted from an income trust to a regular corporation. Investors received one common share for each trust unit they held. The change is in response to Ottawa’s new tax on income-trust distributions, which comes into effect on January 1, 2011.
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PEYTO ENERGY TRUST $17.17 (Toronto symbol PEY.UN; Units outstanding: 121.9 million; Market cap: $2.1 billion; TSINetwork Rating: Extra Risk; Dividend yield: 8.4%; www.peyto.com) produces and explores for oil and natural gas in Alberta. Its average daily production of 23,775 barrels of oil equivalent (including natural gas) is weighted 86% toward gas and 14% to oil. At current production rates, Peyto has proven oil and natural-gas reserves that should last 14 years. Peyto’s cash flow was $0.47 a unit in the three months ended September 30, 2010, up 20.5% from $0.39 a year earlier. The units trade at 9.1 times the trust’s annualized cash flow, based on the latest quarter. The trust’s long-term debt of $455 million is a reasonable 21.7% of its $2.1-billion market cap....