Div yields looking nicer on income trusts

[Criticull]

A couple of income funds have become cheaper in the last week due to the correction we've had. Anybody have favourites right now?

Mine are ipl.un and enf.un...to a lesser extent pif.un due to high payout ratio. Gotta love the liquids business with a high oil to gas ratio.

Good way to have something defensive that has good yield and some appreciation once things become exuberant again.

Also, for peeps who like long oil and still want a dividend, crescent point (cpg) converted and has come off a little.

[DJ_NAV]

pembina is decent... i wish i had more money to buy some yesterday..... i'll look into crescent point.. heard awesome things about there regular stocks.

[Criticull]

They didn't move that much for the longest time, and just started moving up in the last month or two. They've got some hedges in at 80 I think, but you'd have to check their financials.

Another one that looked interesting and cheap was petrobakken. They have similar style positions to CPG, but pay a lower div. All that Bakken stuff is pretty highly priced IMO, but safer maybe than something higher up the cost curve.

[Neil4Speed]

PEY.UN is a good Nat Gas Income Trust with good dividend history, but didn`t really get beat down too bad in the last month or so, so maybe not a bargain stock price wise.

Baytex is a good bet as well. and I agree with Petrobakken.

[ExtraSlow]

The ones mentioned above are good, also:
SPB - 13.3% today. Solid company, diverse interests, and big tax pools.
AVF.UN - 14.0% Possibly unsustainable, depends heavily on commodity prices going forward

Also RSI.UN (10.1%), BA.UN (11.2%) and PBH (9.4%) are pretty nice if you want to diversify out of the petroleum buisness

For real estate, RYL.UN (11.75) is good, but REI.UN (7.6%) is the gold standard for REIT's in canada in terms of solid finances.

I chase dividends hard in both my Registed and non registered portfolios.

[Criticull]

^ can alliant maintain their distribution post-conversion?

[ShOwOfF]

^Royal Host is not a "good...gold standard...in terms of solid finances."

Look at their payout ratio and falling top line. Rio Can however is strong and quite frankly, i'm surprised their unit prices haven't increased given the high yield.

[ExtraSlow]

Originally posted by ShOwOfF
^Royal Host is not a "good...gold standard...in terms of solid finances."

Look at their payout ratio and falling top line. Rio Can however is strong and quite frankly, i'm surprised their unit prices haven't increased given the high yield.
Re-read what I wrote, I was saying that Riocan was the gold standard . . . I think you agree with me.

[ShOwOfF]

My bad. Mis-read that.

OP - Lots of decent yield plays out there. Watch for low debt/GBV, conservative payout ratio, and reasonable balance sheets.

[ExtraSlow]

no worries.
I have used in the past the website dividendinvestor DOT ca for research. The free info is decent, but only if you want to look up a particular stock. Membership is kind of expensive, but it does help you dig up companies that you might not find another way.
Easy to filter by company size, dividend history etc also.

I can't justify the membership fee on a full time basis, might buy another month when it comes time for full portfolio re-balancing.

One piece of advice I have been given is if you are looking at a long term investment, stay away from companies under $1 billion market cap. Smaller ones are hit harder by external forces. Also, it can be tough to get your trade in on small cap stocks, even if the price is favorable. Not always a buy for every seller and vice-versa
I don't always follow that, as can be seen by some of my recommendations above, but I've been burnt by the small guys a few times for reasons that would not have applied to larger companies.
It's worth keeping in mind anyway.

One more note on Royal Host. I actually think they'll be in a good spot if they can weather the next 12 months or so. Fort Mac is still a place I'd love to own revenue property, and that's their base.

[ShOwOfF]

They have a long way to go. They've racked up some credit which is hitting their bottom line hard, and not able to recoup on the top line given the tough hospitality market.

If you like Fort Mac Real Estate have a look at NPR or LRT. With that said, LRT is not a name I recommend. NPR is solid with good exposure to FM/GP.

[Feruk]

Careful with trusts. Note that the tax incentives given to trusts run out at the end of this year, so most trusts will be converting back to corporations THIS year. If you've investing for the distribution (aka dividend), then you have to take into consideration that the distribution will be partially (or completely) cut when these companies convert. Whether you buy a trust should be based on your investment strategy. If you like the companies for more then just the dividend, then buy them. If you just want the dividend, you might wanna look elsewhere.

As for Crescent Point... they've got a great asset base, but are HUGE media hogs and are trading at CRAZY metrics. I'd be very careful buying these guys. I trade oil & gas stocks quite frequently but can't justify holding these guys in my portfolio.

[whodiman]

lots of these trusts say they are committed to holding their dividend to 2013. How is this possible when their EPS is WAY lower than their div. It's like you and I. If we make 50k a year and pay 80k in loans, sooner or later we run out of money. Mind you there are other factors like depreciation and stuff to make them just slightly cash flow positive.

So here is my example. pif.un another example where eps is way lower than Div. I phoned them and asked them how they can sustain this. They replied that they have tax pools until early 2014. What happens when that runs out? well, they expect to grow their business enough by then so that they can sustain the div. But if they don't...... and that is the case with many (not all) of these high yielding income trusts....tax pools and hoping for growth.

Pembina might actually be ok cause they are a pipeline but some of these other ones are garbage. I would actually take something like ipl.un over this one. lower div but their forward EPS almost meets their div as is without growth and tax pools.

Another good one is exe.un. They actually grew their business and revenue in 2009. their NI was down due to FX loss. (non cash item). they currently have over 26,000 old fogies on their waiting list to get into their senior homes. Also, the 2011 thing doesn't apply to them as they never qualified for the tax status. I shouldn't be talking about this as i want this to drop so i can buy more.

[whodiman]

Originally posted by ExtraSlow

Re-read what I wrote, I was saying that Riocan was the gold standard . . . I think you agree with me.

Rei.un may be quite valued here. Their Div is 3 times the earnings they make. read what a wrote just above. However, they are still cash flowing. They are a true reit so they maintain their tax status going forward.

One more thing to talk about is that it is important to evaluate them on their payout to funds rather than EPS...so more of a cash flow than earnings..I like this one but not at this price.

[Feruk]

Originally posted by whodiman
lots of these trusts say they are committed to holding their dividend to 2013. How is this possible when their EPS is WAY lower than their div. It's like you and I. If we make 50k a year and pay 80k in loans, sooner or later we run out of money. Mind you there are other factors like depreciation and stuff to make them just slightly cash flow positive.


I can only speak about oil & gas trusts, but the statements I've read indicate the majority of them are looking to convert and reduce (not fully eliminate) their distribution. Good example is Crescent Point which has already done so.

I don't think I'd want to hold a trust that will use their tax pools to pay out distributions. To me, it's the same as companies that pay out more then 100% of their quarterly income. Bad business. I worked for True Energy Trust back in the day and watched their stock go from $22 to $1 because they paid out too much.

[PeterGTiR]

I've been looking at FTN.TO: FINANCIAL 15 SPLIT CP CL A for their dividend yields. Its June dividend was $0.1257 and based on today's closing share price of $8.78, the annual dividend would be about 17.19%.

Average daily volume for the past three months was only around 20,000 though; may be a little bit low on volume if you want to get rid of it...

[ExtraSlow]

How is FTN paying for a dividend so much higher than the stocks that make it up? Doesn't sound sustainable.
Read through their website, and you'll see their goal is 8% yield per year, so if they are actually paying 17%, it won't last.

Also, some big red flags for me in the prospectus.
Particularly the section about Fees and expenses, and Risk Factors.
This sentence from the risk factors will keep me out of it:
"The Company is a newly organized investment company with no previous operating history and there is
currently no public market for the Preferred Shares or Class A Shares."

So, you have a severe liquidity problem, meaning you'll have trouble selling the shares if you ever wanted to, and your broker won't help you, since he gets 0.5% annual kickbacks as long as you hold then through him.


Unless I'm misreading something about this, fuck no. Maybe better to get an ETF of the financial services sector in Canada, like XFN or CEW. Not 17% yield, but neither is this one over the longer term, and none of the liquidity problem.