An investment trust holding income-producing assets which are paid out
to unitholders in the form of cash distributions. Distributions for Canadian
income trusts are protected from taxation until 2011. The decision to
tax distributions, announced in 2006, has eroded the income trust market
in general, but enhanced the wealth of the richest surviving trusts.
The new rules an annual check up on income trusts - (Jan 2 2008)
It is now 2008. That means there are almost exactly three years before the tax on income trusts falls into place. Trusts have not lost their fascination for Canadian investors, but the market has changed dramatically in the fourteen months since the tax was announced. There are fewer winners, but also fewer losers. A number of companies that were just along for the tax-free ride have abandoned the trust structure or been absorbed by their betters. Many companies that might have been tempted to join in the fun before Halloween 2006 gave up the ghost overnight.
Is the road ahead safe for Canadian investors? - (Dec 12 2007)
If there is a recession coming, nobody in the corridors of authority seems to know quite what to do about it. Every attempt at a solution just seems to create a new problem. It’s as though a railway bridge had gone down and nobody could figure out whether to reroute the trains or just stop them altogether until they decided what kind of bridge to build. In the meantime, everybody’s stuck where they are.
What you can trust about income trusts
- (Nov 21 2007)
Back on Halloween, we looked at the first anniversary of the infamous income trust tax through the eyes of Mr. Gordon Pape, who is convinced that trusts will survive. Income trust investors can take further reinforcement from another expert on the subject, Mr. David West. Writing in The MoneyLetter, he has five firm reasons why income trusts will be with us well beyond the tax deadline of January 1, 2011.
A happy Halloween story income trusts live on
- (Oct 30 2007)
Since the income trust tax will be a year old on Halloween, maybe we should treat trusts in a seasonal fashion. As zombies, or vampires. The undead. The government hasn’t driven a stake through their collective hearts yet, etc., etc. But why be any scarier than we need to be? Despite the carnage that occurred in the trust market after the tax, income trusts are still with us. And they will be with us for some time to come, in the opinion of one of Canada’s foremost analysts of the income investment scene.
How
the rich get richer in the income trust world - (Oct 18 2007)
It has gone down in the financial history books as the “Halloween tax,” and it certainly sent a ghoulish chill down the spines of income trusts and their unitholders. The decision to tax income trust distributions, announced by Finance Minister Jim Flaherty on October 31, 2006, completely changed the landscape for income trusts. One day, trusts were a wildly popular phenomenon with an unlimited horizon. The next, they found themselves fenced in by a clearly defined horizon — the year 2011.
Alberta
vs. the oil companies will investors win or lose? - (Oct 3 2007)
Who would’ve thought it? Surely the best friend Canadian oil companies have in the political arena is the government of Alberta. And yet here they are at daggers drawn. Royalties, of course, are the sticking point. Just yesterday, another energy trust added its voice to the growing controversy. Crescent Point Energy Trust (TSX-CPG.UN) threatened not to spend a cent in Alberta next year if royalties are jacked up.
When
seeing is not believing with income trusts - (Sep 7 2007)
A good deal of the talk about income trusts over the past months has had the quality of crying over spilt milk. Since the income trust tax was proposed — it’s been almost a year, believe it or not — we’ve seen lots of news about trusts that have sagged, or slipped off the map altogether. But the good income trusts have gotten stronger in the process. Yet even those trusts seem to have suffered a setback lately. Or have they?
Is this the calm before the income trust storm?
- (Aug 8 2007)
Everybody takes time off in summer. That includes the people in every corner of the investment world — investors, the companies they invest in, brokers, accountants, lawyers and market pundits. Of course, things don’t shut down completely, folks are still investing, brokering, accounting and punditing, but you know what we mean. The pace just isn’t the same. But why has it been so eerily quiet in the income trust market?
How to keep all your real estate trusts under one roof
- (Jul 6 2007)
In general terms, REITs with predominantly Canadian assets will escape the 2011 imposition of the tax; those with significant U.S. or other foreign holdings (think hotels and senior care) will have to restructure, or pay. But of course it's still 2007. And REITs of all kinds remain a strong investment, says Mr. Gordon Pape in the The Income Investor. There's a way to profit from REITs of all kinds, too.
Taking stock in energy but not in the oil patch
- (Jul 5 2007)
Right off the bat, the most recent issue of Personal Finance takes a distinct position on energy stocks. In his opening remarks, Mr. Neil George, the editor, makes the point bluntly: “If you’re looking for us to write that the price of oil has nowhere to go but to the moon and that you just have to load up on Exxon Mobil, you’re reading the wrong newsletter.”
Beating the stock market index for 20 years and counting
- (Jun 28 2007)
Mr. David Stanley is celebrating an anniversary. Normally this would be an occasion for family and friends only. But since Mr. Stanley is holding his party in the pages of Canadian MoneySaver, we feel free to join him. The occasion is the 20th anniversary of a portfolio this analyst put together under the name “Beating the TSX.” (Of course, it was “Beating the TSE” when he began, but we won’t quibble over a letter.)
An income trust that's still writing plenty of cheques
- (Jun 25 2007)
As our new century dawned, everything that was printed on paper was being consigned to history's scrap heap. The coming of the computer age meant that books, newspapers, magazines, comic books and the like would go the way of the 8-track cassette. Not so fast, Bill Gates! While the microchip revolution has radically altered the way things are printed, it has not eliminated the demand for the printed page. It will be some time before people do all their reading on a computer screen - not that there's anything wrong with reading on a computer screen.
An income trust that's still writing plenty of cheques
- (Jun 25 2007)
As our new century dawned, everything that was printed on paper was being consigned to history's scrap heap. The coming of the computer age meant that books, newspapers, magazines, comic books and the like would go the way of the 8-track cassette. Not so fast, Bill Gates! While the microchip revolution has radically altered the way things are printed, it has not eliminated the demand for the printed page. It will be some time before people do all their reading on a computer screen - not that there's anything wrong with reading on a computer screen.
Putting new fuel in income trusts
- (Jun 14 2007)
In a tax-challenged income trust market in which no new trusts appear and weaker trusts disappear, the rich really do get richer. The survivors scoop up the resources abandoned by the trusts that fall by the wayside. But that doesn’t mean the market has settled. Some of those survivors may stumble. If so, can suitable replacements be found?
Are forestry stocks out of the woods?
- (Jun 11 2007)
Forestry stocks have been the poor relations of the great commodities boom of the past few years. Between Canada’s struggles in the softwood lumber dispute and the fall-off in U.S. housing activity, there’s been a lot to keep investors away from companies that make their living from wood. One U.S. advisory has a different point of view. Writing in Personal Finance, Mr. Neil George begins his argument with a golf analogy and concludes by recommending a couple of Canadian trusts (and one Aussie firm). We’ll get to those picks in a moment. First, let’s check the clubs in the author’s golf bag.
What the world needs now is Canada's oil sands
- (Jun 8 2007)
Debate about the oil sands rages on among energy firms, economists, stock market analysts, environmental groups, political pundits, newspaper columnists, and the cab drivers in Fort McMurray. Where does this leave investors? Are the oil sands too expensive and messy to exploit? Or is the world’s demand for oil simply too great to let this enormous resource lie dormant?
Stock market memories and an update on the Big Dog Feeder
- (May 30 2007)
It is with a great deal of interest each month that we pick up The Bowser Report, chock full of information, tables, recommendations, snappy quotes and even cartoons. This advisory is put out by Mr. Max Bowser in Newport News, Virginia (the oldest continuously-named settlement in the United States, in case you were wondering — and that’s just the kind of tidbit you’d find in this market letter).
How small caps grow up to be blue chips
- (May 29 2007)
For those who like to buy stocks for the long term, few stories are better than that of a stock that you can buy when it’s small and keep ‘til it’s much, much bigger. What follows is the story of one such stock. Since it made its first appearance as a publicly-traded company in 1993, Richelieu Hardware (TSX-RCH) has marched from strength to strength. The company is a manufacturer and wholesale distributor of specialty hardware. (You will never see a “Richelieu Hardware” awning on the street; it is not a retail operation.)
In Canada we trust ... an American vote for income trusts
- (May 24 2007)
On more than one occasion these past few weeks, we have noted that interest in income trusts has not flagged in recent months. Quite the opposite. The tax-inspired sword of Damocles that is hanging over the head of trusts has certainly shaken up the market, but it has not come close to finishing it off.
Why you should buy a 228-year-old income trust
- (May 22 2007)
Two centuries ago, across the vast expanses of Canada’s wilderness, two mighty companies battled for supremacy in the fur trade. And they did not disappear into the mists of history. They are still with us.
We all know where we can find the Hudson Bay Company these days (even under U.S. ownership). Its bitter rival, the North West Company, might not be quite so easily identified by many Canadians dwelling in the southern regions of the country.
"A pipeline play with pizzazz" -- it can only be Canadian
- (May 21 2007)
The last time we visited the pages of The Complete Investor, this American advisory was recommending that investors sell two Canadian stocks due to doubts about the future of the oil sands. We duly reported it.
In the latest issue, we find the opposite: an enthusiastic recommendation for a Canadian company. Since our preference is to report what appears to be good news for Canadian shareholders, here’s the story.
Why there's still plenty of energy in income trusts
- (May 15 2007)
Despite Mr. Flaherty’s infamous tax, income trusts still have plenty of fans on both sides of the border. We see in the most recent issue of Superstock Investor that the newest position on Mr. Jeff Manera’s Master List of Recommended Stocks is a Canadian income trust. That makes four Canadian trusts among the 20 equities on the advisory’s Master List of Recommended Stocks. All four are in the energy field.
Income trusts survival of the fattest
- (Apr 19 2007)
To coin a phrase, there’s no use crying over spilt milk. There is nothing to be gained by debating the pros and cons of the government’s trust tax. It’s in the books. So let’s put the tax in the rearview mirror and look ahead. And what we see is a surprisingly clear picture, at least according to the Income Trust Guide. This advisory is a supplement to the Money Reporter, which keeps Canadians in the know on income investments.
