New Tax Rules Could Create Bargains

Article Excerpt

CANADIAN UTILITIES LTD. $46 (Toronto symbol CU; Income Portfolio, Utilities sector; SI Rating: Above average) has abandoned its plan to convert its unregulated gas processing and storage businesses into income trusts after Ottawa changed the taxation rules of trusts. The company will probably hang on to these assets instead of selling them. Now that the trust plan is dead, Canadian Utilities will probably use its growing cash balances ($5.85 a share) for acquisitions. Thanks to the new tax rules, which have hurt the prices of many oil and gas trusts in Alberta, the company could pick up some bargains. It could also raise its $1.16 dividend, which yields 2.5%. Canadian Utilities is a buy. …

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