Toronto Escorts

dividends, trusts, etc

You Bet!

Visiting this planet
I know the tax changes wiped out the value of many trusts, but yet they linger on. Many offer over 10% interest, and I can get them with a DRIP. Is there any reason not to pile more of my investments into them?

Next year, when the rules take effect, will many of these products simply evaporate, dropping price to 0, or will they simply transform?

Can anyone suggest a product or strategy for increasing my monthy income from investments (dividend type increases)
 
B

burt-oh-my!

Just hold 'em, you'll do fine. And no, they won't drop to zero - in fact I suspect they will go up as we approach the implementation of the new tax rules.
 

Rockslinger

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Apr 24, 2005
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Next year, when the rules take effect, will many of these products simply evaporate, dropping price to 0, or will they simply transform?
I stayed away from income trusts because tax rules can be changed instantly at the whim of the government. Anyway, I thought that RESOURCE income trusts do eventually go to zero because an oil well is a depleting asset.
 

hinz

New member
Nov 27, 2006
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I stayed away from income trusts because tax rules can be changed instantly at the whim of the government.
Hmm...it's hard to imagine the government changes the tax rules again on income trusts anytime now since it's 10 months away from converting income trust to corporation deadline.

There's no upside to do it unless you have a NDP majority government in Ottawa, something I believe the odd is roughly equal to the Bloc running Canada. NDP ideologies make the Tories and Liberals policies sound "mainstream, with common sense". :rolleyes:

Having said that, don't try to be seen as giving stock tip but do take a look on CML Healthcare income fund (CLC.UN) . The risk reward seems attractive IMHO.

Anyway, I thought that RESOURCE income trusts do eventually go to zero because an oil well is a depleting asset.
That apply to all publicly listed resource companies globally, regardless of the market cap. The resource income trusts happened to be more tax efficient before 2006 Halloween Massacre.
 

oil&gas

Well-known member
Apr 16, 2002
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Ghawar
I stayed away from income trusts because tax rules can be changed instantly at the whim of the government.
Quite a few income trusts already converted to corporations
in the past 1-2 years. Off the top of my head these are some of the
recently converted ex-income-trusts: Ag growth,
Newalta, Crescent Point, Cathedral energy, Trinidad drilling etc.
A lot more conversions are going to follow for the rest of 2010.
By 2011 when the new tax rules are in place you won't see many income trusts to remain maybe except those that won't survive anyway.


Anyway, I thought that RESOURCE income trusts do eventually go to zero because an oil well is a depleting asset.
That may be the way it is with resource income trusts (or whatever it is called) in the
U.S. Oil and gas income trusts in Canada can, at least in principle, replace their depleting
reserves through acquisition of mature properties (usually financed by
equity unit offering at the cost of stock dilution). Depletion has been
a major concern and many of these trusts indeed run on a business model that is
not unlike a ponzi scheme. Nonetheless things have changed a lot in the world
of resource income trusts in the lately. Quite a few trusts have adopted
more sustainable business model that should allow them to continue to pay
out a nice dividend while maintaining some reserve growth for some years.
How long they will remain sustainable is anyone's guess. Canada's conventional oil reserve
has long passed its 50% depletion point. I will be surprised if any
oil-weighed income trust can maintain its (per stock unit) reserve for more than 10 years. It doesn't matter if all these resource trusts will go to
zero eventually as long as you can recoup your investment
from the cash distribution of your stock long before its death.
There are also long life resource trust like Labrador Iron Ore fund
for which the precise reserve life matters little.

I know many people will point to oil sands as the alternative to
investment into conventional oil&gas trusts. Personally I think Canadian
oil sand is one over-hyped and over-rated resource
and I stay away from oil sands producer
in my investment portfolio. But that is another issue.
 
Ashley Madison
Toronto Escorts