30 replies to this topic

[PorkLoin]

www.peyto.com is Peyto Energy Trust's website, and it's the best one I've seen for information. There's a lot there that is valuable to know for trusts in general. It also makes Peyto look good - 22% owned by insiders, and you can see what's happened in the "Insider Trading" section. For the most part, the insiders have increased their holdings. Doug

[vitaminm]

VitaminM: Doug, Do these Trusts pay dividend monthly or quarterly?

Hey Vitamin, M for monthly.

There are some relatively few trusts that do pay less frequently than monthly, like Canadian Oil Sands Trust, which pays quarterly - Feb., May, August, Nov., but all the ones I listed pay monthly. An example is Shiningbank, which announced on Jan. 19th that it'll pay C$0.30 per share, the ex-dividend date to be Jan 27th, and the pay date slated for Feb. 15th. That's a very normal pattern, and shortly after Feb. 15 they'll announce the February dividend.

Canadian Oil Sands Trust has been a "darling" of the media and brokerages, and has had a heck of a run, from under C$25 in 1999 to $150 last week, but the yield is currently less than 3% and I think lots of the news and hype is priced in. The dividend doubled last October, and the oil sands may be a huge deal in the future, but I still think that for now there is not the potential for share price increase and big dividends in COS as there is with the trusts I listed.

There are some Canadian resource trusts dealing with coal mining, metal ore mining, timber, etc., and some of them pay quarterly too, but of the oil & natural gas trusts, as well as the power generation trusts, which are the ones I'm interested in, it's only Canadian Oil Sands that doesn't pay monthly. By far, most of them will make the ex-dividend date around the 27th or 28th of the month, and pay about three weeks later. Nice for compounding, i.e. if the yield is 15% then with reinvestment the effective yield for a year goes up 1-2%.

Best,

Doug

Thanks.

[Mike]

Doug, In that these Canadian trusts are...Canadian(!), how are you purchasing them? A Canadian brokerage acct.? Recommendations? Thanks. (Great thread.)

[PorkLoin]

Mike, You can buy Canadian issues on US exchanges - for example Viking Energy Trust, which has the OTC symbol VKERF in the US. I have some in a fidelity account, and it's listed as: VIKING ENERGY RTY TR TR UNIT ISIN #CA9269241019 On the table I posted I list the US symbols as well as the Canadian ones. I worked in Canada from 1986 though 1994, and lived there for the last four years, but I also have US accounts with Canroys in them. Not a problem to buy them, just the usual thinner markets, limit orders being advisable, etc. Or, your broker may be able to buy on the Toronto exchange. For US residents, the Canadian gov't withholds 15% of dividends paid from trusts. You can recover that via filing an IRS form (I forget the number) for "Foreign Tax Paid." This is not true for an IRA in the US, however. In that case you're stuck losing the 15%. For years I considered the investment so compelling that I didn't worry about it, and the share price appreciation and rising dividends made it no big deal. Now it may be a deal, at least certainly worth factoring into the equation. I have the equivalent of an IRA in Canada, and that gets around that 15% withholding, and naturally if I'm gonna buy a trust I do it with that account. For now, it's maxxed out, little free cash, so I've got some in US accounts too. Doug

[vitaminm]

Mike,

You can buy Canadian issues on US exchanges - for example Viking Energy Trust, which has the OTC symbol VKERF in the US. I have some in a fidelity account, and it's listed as: VIKING ENERGY RTY TR TR UNIT ISIN #CA9269241019 On the table I posted I list the US symbols as well as the Canadian ones.

I worked in Canada from 1986 though 1994, and lived there for the last four years, but I also have US accounts with Canroys in them. Not a problem to buy them, just the usual thinner markets, limit orders being advisable, etc. Or, your broker may be able to buy on the Toronto exchange.

For US residents, the Canadian gov't withholds 15% of dividends paid from trusts. You can recover that via filing an IRS form (I forget the number) for "Foreign Tax Paid." This is not true for an IRA in the US, however. In that case you're stuck losing the 15%. For years I considered the investment so compelling that I didn't worry about it, and the share price appreciation and rising dividends made it no big deal. Now it may be a deal, at least certainly worth factoring into the equation.

I have the equivalent of an IRA in Canada, and that gets around that 15% withholding, and naturally if I'm gonna buy a trust I do it with that account. For now, it's maxxed out, little free cash, so I've got some in US accounts too.

Doug

Doug,

I don't see dividend paid on VKERF.PK

http://finance.yahoo...e=24&f=2006&g=v

[PorkLoin]

I don't see dividend paid on VKERF.PK http://finance.yahoo...e=24&f=2006&g=v

Yeah, vitaminm, and I'm guessing it's because some of the information on Canadian stocks that are not listed on certain US exchanges does not get transmitted or entered into US websites and quote servers. You can always go to vikingenergy.com and see the "Distributions" part. Last year the January through September distributions were 8 cents a share and then it went to 12. That's in Canadian currency.

Viking has a plan where free of charge you can get paid in US currency at the Bank of Canada exchange rate on the record date (3 business days after the ex-dividend date) if you want.

On the Yahoo site I tried "ERF" for Enerplus, which is listed on the NYSE and the information was there - 8.6% dividend. Viking is Over The Counter in the US, and the dividend info doesn't get passed along, apparently. My opinion is "Good," since IMO the NYSE listed trusts have been bid up, knocking down the yield.

NYSE listed Canroys:

Advantage Energy AAV yields 13.4%
Enerplus Resources ERF 8.6
Harvest Energy Trust HTE 10.94 but the Yahoo site doesn't have it.
Pengrowth Energy PGH 10.5
Petrofund Energy PTF 10.3
Primewest Energy PWI 11.5
Provident Energy PVX 10.9

While that Advantage dividend is tempting, the trust is paying out almost 80% of distributable cash, and the reserve life is low enough at 6.5 years that I prefer to put my money elsewhere. It's also messing around with coalbed methane and I don't know how that's going to turn out.

Enerplus is a great trust but very high-priced now with a relatively low yield.

Harvest IMO is very good. Going to merge with Viking Energy and raise the dividend 3 cents per share. Owning Viking will mean owning Harvest when the merger is complete - I think that's in March or April. 4 Viking shares become 1 Harvest share.

Pengrowth treats US shareholders differently than Canadians. The PGF.B shares on the Toronto exchange yield over 13% while PGH on the NYSE is only at 10.5% Pengrowth also has suffered from rising production costs, more than most trusts. Again, I think money is better deployed elsewhere.

Petrofund is also a higher-cost producer ($2 or $3 higher per barrel of energy equivalent than "low cost" trusts), but pays out less than 50% of distributable income as dividends (that's good), and is a big trust with a nice-looking price chart. I'd buy it if the price came down/the dividend went up.

Primewest IMO is nice, too. I'd just like to see it cheaper for purchases. Why not get 2, 3, or 4% more yield elsewhere?

Provident - much the same. If I had 20 trusts in my "model portfolio" rather than 11, I'd put these last three in it.

Canetic Resources Trust, recently created from the merger of Starpoint Energy and Acclaim Energy, is going to be listed on the NYSE as far as I know, and I think this will propel the shares higher.

Best,

Doug

[vitaminm]

I don't see dividend paid on VKERF.PK http://finance.yahoo...e=24&f=2006&g=v

Yeah, vitaminm, and I'm guessing it's because some of the information on Canadian stocks that are not listed on certain US exchanges does not get transmitted or entered into US websites and quote servers. You can always go to vikingenergy.com and see the "Distributions" part. Last year the January through September distributions were 8 cents a share and then it went to 12. That's in Canadian currency.

Viking has a plan where free of charge you can get paid in US currency at the Bank of Canada exchange rate on the record date (3 business days after the ex-dividend date) if you want.

On the Yahoo site I tried "ERF" for Enerplus, which is listed on the NYSE and the information was there - 8.6% dividend. Viking is Over The Counter in the US, and the dividend info doesn't get passed along, apparently. My opinion is "Good," since IMO the NYSE listed trusts have been bid up, knocking down the yield.

NYSE listed Canroys:

Advantage Energy AAV yields 13.4%
Enerplus Resources ERF 8.6
Harvest Energy Trust HTE 10.94 but the Yahoo site doesn't have it.
Pengrowth Energy PGH 10.5
Petrofund Energy PTF 10.3
Primewest Energy PWI 11.5
Provident Energy PVX 10.9

While that Advantage dividend is tempting, the trust is paying out almost 80% of distributable cash, and the reserve life is low enough at 6.5 years that I prefer to put my money elsewhere. It's also messing around with coalbed methane and I don't know how that's going to turn out.

Enerplus is a great trust but very high-priced now with a relatively low yield.

Harvest IMO is very good. Going to merge with Viking Energy and raise the dividend 3 cents per share. Owning Viking will mean owning Harvest when the merger is complete - I think that's in March or April. 4 Viking shares become 1 Harvest share.

Pengrowth treats US shareholders differently than Canadians. The PGF.B shares on the Toronto exchange yield over 13% while PGH on the NYSE is only at 10.5% Pengrowth also has suffered from rising production costs, more than most trusts. Again, I think money is better deployed elsewhere.

Petrofund is also a higher-cost producer ($2 or $3 higher per barrel of energy equivalent than "low cost" trusts), but pays out less than 50% of distributable income as dividends (that's good), and is a big trust with a nice-looking price chart. I'd buy it if the price came down/the dividend went up.

Primewest IMO is nice, too. I'd just like to see it cheaper for purchases. Why not get 2, 3, or 4% more yield elsewhere?

Provident - much the same. If I had 20 trusts in my "model portfolio" rather than 11, I'd put these last three in it.

Canetic Resources Trust, recently created from the merger of Starpoint Energy and Acclaim Energy, is going to be listed on the NYSE as far as I know, and I think this will propel the shares higher.

Best,

Doug

Thanks

If oil price goes down one may loose all dividend.

http://stockcharts.com/webcgi/perf.html?&#...e,$xoi,xle

[PorkLoin]

Well, Vitaminm, that could be, but it would be such a severe oil price decline that I give it near zero probability. I don't pick trusts that are using all their distributable money for dividends, because product price declines would surely bring dividend cuts, and let me tell you -- when that happens, down go share prices. All the trusts in the portfolio have fairly low costs of operation, all less than $11 per barrel of energy equivalent. Even if crude oil went to $40, they would still be making good money. Natural gas has had a wicked price decline since mid-December, like from over $15 to down around $9 now, and this has hurt some of the share prices, but not much. Even at $8 or $9 for natural gas, the trusts are making lots of profit. The trusts that are heavily weighted towards natural gas do present some worry for me in that in the future they may have to cut dividends. Yet for now things still look good. It's only been about 11 months in all of history that gas has been above $7.50, so prices remain historically high. There are no guarantees, of course, and I do think that the fastest and easiest money in the Canroys has already been made, during the big energy price rise from 1998/1999 (or the low in 2001) to late 2005. Total return was 400%, 500%, even up to 2000% with some. I still think energy prices are in an overall bull market, though, and if so then the dividends and share prices should continue to grow. Best, Doug

[vitaminm]

Well, Vitaminm, that could be, but it would be such a severe oil price decline that I give it near zero probability. I don't pick trusts that are using all their distributable money for dividends, because product price declines would surely bring dividend cuts, and let me tell you -- when that happens, down go share prices.

All the trusts in the portfolio have fairly low costs of operation, all less than $11 per barrel of energy equivalent. Even if crude oil went to $40, they would still be making good money. Natural gas has had a wicked price decline since mid-December, like from over $15 to down around $9 now, and this has hurt some of the share prices, but not much. Even at $8 or $9 for natural gas, the trusts are making lots of profit.

The trusts that are heavily weighted towards natural gas do present some worry for me in that in the future they may have to cut dividends. Yet for now things still look good. It's only been about 11 months in all of history that gas has been above $7.50, so prices remain historically high.

There are no guarantees, of course, and I do think that the fastest and easiest money in the Canroys has already been made, during the big energy price rise from 1998/1999 (or the low in 2001) to late 2005. Total return was 400%, 500%, even up to 2000% with some. I still think energy prices are in an overall bull market, though, and if so then the dividends and share prices should continue to grow.

Best,

Doug

Thanks.

Is there any high yielding royalty trust mutual fund ?

[PorkLoin]

Vitaminm: Is there any high yielding royalty trust mutual fund?

Well heck yes. In my order of preference; best first.

Avenir Diversified Income Trust, Enervest Diversified Income Trust, Citadel Diversified Income Trust, Series S-1 Income Fund, Sentry Select Diversified Income Trust, Select 50 S-1 Income Trust, Diversitrust Income Fund, Brompton Stable Income Fund.

In percent, yields are 11+, 10+, 9+, 8+, 8+, 7, ~5.7, ~5.7

Avenir is different from the others in that it's been using its income not just to pay dividends, but to buy more producing assets. Far and away my favorite here.

None of these are as risky as pure energy trusts. They're into power generation, real estate, etc., too.

Doug