These high-yield income trusts also have appeal

Article Excerpt

These three resource income trusts are more volatile than telecom stocks. But we feel their high yields and steady cash flows help offset their risk. As always, you should limit income trusts to no more than 15% of your total portfolio. PENGROWTH ENERGY TRUST $18 (Toronto symbol PGF.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 247.9 million;Market cap: $4.5 billion; SI Rating: Average) owns oil and natural gas properties in Alberta and B.C. Pengrowth prefers to focus on mature, proven properties that provide it with steady cash flows. At current production rates, Pengrowth’s reserves should last 10 years. The trust tends to replenish its reserves with acquisitions instead of exploration. However, it typically pays with new units, which conserves cash. Pengrowth’s annual distribution rate of $2.70 yields 15.0%. Pengrowth is a buy among income trusts. FORDING CANADIAN COAL TRUST $76 (Toronto symbol FDG.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding:148.7 million; Market cap: $11.3 billion; SI Rating: Average) is a major producer of metallurgical coal,…