Near-perfect safety and 15% dividends.
You can confidently put your cash to work. Here's an investment that pays you up to 15% with near-perfect safety.
And another paying 10.9%, again with near-perfect safety.
... another paying 10.7%-plus ...
... four more paying 9%-plus ...
... and every last one characterized by ...
I know you may be skeptical. When even high-risk junk bonds are paying only 6%-9%—how can any safe investment be yielding ...
15% ... or even more
I’ll explain in a moment. But first, please consider—
- A safe-and-boring quasi-public utility with a captive market,
paying ... 9%.
- A firm diversified across the entire energy sector for added safety ...
with dividends of 9%.
- A telecom giant with phone, web and digital TV customers virtually locked in, growing 18%/yr, and still paying dividends of 11%!
- An oil pipeline company with 35% growth and an 8% don’t-touch-me dividend.
Well, my readers know. But they tell me they would prefer to keep the CANADIAN EDGE high yields to themselves.
Your Broker Doesn't Want to Tell You
Why Wall Street is (Always) So Easy to Beat
I’m not surprised so many U.S. investors know little about Canadian trusts. Your broker (if you still have one) probably doesn't either. I doubt he or she has been calling up saying, ‘Hey, how about let’s send your money to Canada for 20%+ safe yields.’
There are reasons your broker doesn’t do this, such as ... I make bigger commissions selling you the stock du jour ... too much paperwork ... international investing too complicated ...
Might as well add “too lazy.”
Because you can buy shares in these trusts wherever you now buy stocks, at comparable (or NO) commissions and with comparable ease. The shares are as liquid as ExxonMobil—and pay a lot more.
My information service, CANADIAN EDGE, has been analyzing these trusts on behalf of investors like you since they came into existence several years ago. I spend my days and nights reading up on, thinking about, analyzing—and visiting—Canadian income trusts. They are my life. I think I understand them better than anyone in the U.S., and probably better than many Canadians, too.
In this letter, I’ll update you on: What these trusts are ... how they work ... why they pay you such astonishing yields.
I’ll back up my “near-perfect safety” claim with cold, hard facts. And show how, with a bit more risk, you can get yields approaching 15% ... and even more.
I’ll discuss taxes, always a consideration when you invest in something just a bit different.
And it’s only proper to examine any potential risk. I’ll do so in an honest and straightforward manner. In the current investment climate, the last thing you need is more hype.
For example, is there a risk share prices will tank if a Canadian income trust converts to a corporation? (The short answer is: Share prices are at least as likely to rise. Details in a moment.)
Lastly, I’m going to talk about you. Whether you need to make back money lost thanks to Wall Street greed. Or, if you don't want to delay the retirement you've worked hard for and deserve.
Well, here's a way to do both:
Look north. Onward ... to Canada ... and re-charging your wealth.
Safety First? Definitely, But Don’t Overlook
Canadian income trusts are pass-through entities. That is, they pass almost all their profits through to you, the shareholder, in the form of dividends. In that sense they resemble U.S. real estate investment trusts (REITs)—except that the Canadian trusts must pass through a greater percentage of profits to shareholders than U.S. REITs are required to do—up to 85%.
The trusts were created by law, initially to benefit oil and gas industries, a backbone of the Canadian economy.
Canada figured its oil and gas producers needed a way to compete with the Exxons of the world for investor dollars. So, eye-popping dividends might be just what the doctor ordered.
But they proved such runaway successes that other Canadian industries also reorganized as trusts.
There are now over 200 Canadian income trusts—in everything from Alberta oil-sands extraction, to hydro and wind power, to online search engines, to movie theaters and health care and restaurant chains, and more. Out of the 200+, about 150 are suitable for U.S. investors.
And out of those 150, only a select 33 qualify for my seal of approval—awarded only to those trusts that pass exacting tests for safety, stability, sound management, dividend maintenance and growth potential.
Sometimes Canadian income trusts are new ventures. Often they’re spinoffs of well-established firms. Some are trusts of trusts, resembling our mutual funds. But all are required by Canadian law to pass through most of their profits to you.
And they do. On average these income trusts pay out 80%-85% of profits to you. (Try persuading ExxonMobil to do that.) And most trusts do so monthly. That’s right—a dividend once a month, not once a quarter. Like a paycheck.
What’s more, these trusts operate in the soundest economy among all the G-7 developed nations.
Canada never had a sub-prime crisis. Its banking system is the envy of ... well, of the U.S., among others. And, as an added bonus, the Canadian dollar (affectionately known as the “loonie”) is currently rising against our beaten-up greenback, providing yet another profit-kicker for U.S. investors in Canadian shares.
Not all Canadian income trusts are good investments. Indeed, after Parliament created them, a bunch of fly-by-night trusts hit the market, snaring investors with promises of too-good-to-be-true tax breaks. Thankfully, most of those trusts have dried up and blown away, leaving the best-managed ones standing.
And since last spring, market madness has many oil trusts especially selling at bargain rates. But it's actually great news for you. Because with share prices low, the already-handsome dividend yields are now, in a word, spectacular.
And for most of the Canadian income trusts we follow, dividends are growing. These trusts have managed themselves cautiously and prudently, to survive even the worst economic times. They are the ones that put the interests of you, the shareholder, first.
Now that their prices are down to levels where you can achieve 15% yields with close-to-ideal safety, plus the expectation that both dividends and share prices will grow ... why in the world would you even consider a 2% Treasury yield?
We’re About to Take ... the "Grandma Test"
I'm familiar with all 200+ Canadian income trusts and I recommend only
the best. These are the ones that have passed the market's toughest
"stress tests." They have the best businesses ... the most conservative
management ... the biggest cash hoards ... the highest dividends ... and
the lowest risk.
Right now I'm covering 33 such trusts. I've put my own money in a number
of them, from those that are super-safe to a few that are "out there."
Even the risky ones don't trouble me, though. I sleep like a baby. Especially when I'm getting dividends in the 9% - 15% range.
But maybe that's not good enough for you. Maybe you're saying, So what?
Asking, What about my grandmother's money? Where would I put that? What
would be safe enough for her nest egg?
Well, I've administered the "grandmother test" and winnowed down my
portfolios to a 33-trust list. And the 18 trusts in my conservative
portfolio are the safest of the safe ... the Canadian income trusts I'd
be comfortable entrusting with even Grandma's nest egg.
But will they be safe enough for you? Here are the facts. Please judge for yourself.
When It Comes to Income Investing ...
Everything You Thought You Knew Might Be Wrong
One of my top choices is said to have an odd mix of assets, but it's supremely profitable. Its principal business is infrastructure—power infrastructure and "social" infrastruture. If there’s another company anywhere on Planet Earth that produces power from gas, wind, hydro and biomass—and has a huge stake in long-term care for elders—I don’t know its name.
An energy company that does it all. Much of Canada’s economy is based on energy and natural resources, and many income trusts are in the business of oil and gas extraction. While these energy trusts have had their high-flying moments, most are in the doghouse these days; you won’t find me talking much about them in this letter. Diversified energy companies are a different story, though.
This trust has interests in gas extraction, pipelines, gathering and processing, energy services, even power generation including “green” wind power. With a three-year growth rate of 18%, there’s even the prospect of long-term capital appreciation. In the short term, though, this company’s shares are one of the best bargains around—making the 16.94% dividend too tempting to pass up.
The telecom that communicates $$$. This communications conglomerate has consolidated a number of smaller telecoms into one of Canada’s largest corporate entities. With a market cap of more than CAD 10 billion and a three-year growth rate exceeding 18%, it’s both a growth and an income play. It pays investors handsomely—11%—and, let it be noted, monthly.
Growth and income in a sheltered oil and gas sector. When you drill for oil and gas, you have your ups and your downs. But regardless of market price, producers rarely turn off the spigots. It’s too costly. No, they keep pumping the stuff to the refineries and downstream markets, through ... pipes.
Say hello to the pipeline industry—the stable, fluctuation-resistant end of the energy biz. Back last June when oil prices were sky-high, this trust’s shares were up near USD 19. Now the price has been beaten back down to around USD 12 by investors who don’t necessarily understand the fine points of energy economics.
That offers you a growth and income opportunity with great safety. This trust reports record growth and income in every recent year, with a growth rate around 35%. You just sit back and collect that (yes, monthly) 9% distribution check while you wait for share prices to start rising again.
These are the five highest yielders in my portfolio of super-safe Canadian income trusts. I’m sure you’d like to know details on all of them—names, trading symbols, what they do, their prospects and their risks. And you shall. To get onboard CANADIAN EDGE and access our portfolios, go here.
Insurance for Investors
The 1-to-6 Ranking System and How It Protects YOU
When you join CANADIAN EDGE, the first thing to catch your attention will be my risk-rating system. Most of my conservative trusts carry a risk rating of 1—the lowest on a 1-to-6 scale where 6 is the riskiest.
You'll find that most trusts in my conservative portfolio rate a perfect 1 for safety.
But ... suppose you can stand a little more risk than our top 1 safety rating? Then how about ...
- A developer of oil and gas properties in western Canada with a risk factor that’s actually rather moderate—3 on the scale of 1 to 6—yet delivers a great, solid 9% yield—monthly
- A global chemical supplier and chemical waste processor with a not-too-terrible 4 rating and a juicy yield of 8%
- An oil and gas producer in western Canada, the largest operating as an income trust, also ranking 4 for risk, and paying 9%
I’m not saying these riskier plays are for you. But I am saying: They check out. They’re well-managed companies with bright prospects. I can attest to that. I’ve done the legwork myself. That’s why I bring them up in a letter that’s mostly about safe-and-secure income investing—to point out the core benefits of subscribing to CANADIAN EDGE. These are—
- Safety first. As mentioned, every trust we follow gets ranked on the 1-to-6 safety scale. We group the safest high-yielding trusts in our monthly “Conservative Portfolio.” Now, please understand: Unlike the super-safe “Top Ten” list, several trusts currently included in the Conservative Portfolio get a risk ranking of 2 or 3 rather than the coveted 1. Why include them in the Conservative Portfolio? Because in my judgment and following exhaustive analysis, their reward—the payoff in dividends now plus growth in the future—far outweighs their risks.
- Due diligence. It’s that micro-analysis—hours spent poring over income statements and balance sheets so you don’t have to, days in the bush mucking through tar-sand fields to verify producers’ claims—that sets CANADIAN EDGE apart. When I say an investment checks out, you can hang your hat on it. I’ve done the homework for you.
- Investor choice. Some investors are conservative, others have a taste for risk. CANADIAN EDGE serves both. In addition to the Conservative Portfolio, we group riskier plays into an “Aggressive Portfolio.” Right now the Aggressive Portfolio holds 13 Canadian income trusts while the Conservative Portfolio holds 20, a reflection of my concern over volatile market conditions. But those 13 Aggressive Portfolio picks offer a combination of growth potential, high yield and relative safety that, frankly, cannot be matched right now in any market but Canada’s.
- Candor. I always tell the truth, even when it hurts. If I like an investment but know something negative, I share it. The tidal wave of hype is enough to drown the most knowledgeable investor. The last thing I want is to add to that.
105.1% Total Return ...
Despite one of the worst down markets in history, most of our picks have been stellar winners …
- 105.1% total return in our first 42 months on the 10 trusts in our
initial portfolio ...
- 63.3% overall gains since the beginning of 2008 for some
- 68% average gains on a basket of Canadian real-estate trusts (REITs) ...
- 170% specific gains on one super-performing energy trust ...
The investments in our CANADIAN EDGE portfolios all have been vetted personally and thoroughly—by me. If you are a long-term investor (and I hope you are), you’ll consider whether it makes sense to buy now—before the market takes off again, as it must. And, while the market flips about and others fret, take solace in double-digit dividends not available with comparable safety anywhere else in the world.
Hand-Holding: No Extra Charge
Ready To Get Started? Here’s Everything You Need
You’ve read this far but you may still have questions. After all, it may well be the first you’ve ever heard of Canadian income trusts. You want to know where to find out more, where to track prices, how to buy and sell. Without going 20 different places for the information.
You don’t have to. CANADIAN EDGE will become your one-stop shop, with ...
In-depth analysis on a weekly-plus basis. The monthly CANADIAN EDGE serves up the latest news and analysis on income trusts, including “High-Yield Picks of the Month,” the updated Conservative and Aggressive Portfolios, and a special feature—rankings of dozens more income trusts that show promise but haven’t yet been examined in depth. Even though we haven’t put these trusts under our analytical microscope, we still assign a 1-to-6 safety ranking based on their published financials and statements. Expect serious, thoughtful analysis at length, not CNBC-style sound-bites. The current issue of CANADIAN EDGE runs 82 pages.
- FLASH ALERTS supplement the monthly analysis, focusing in depth on trends and events that can affect your holdings.
- CANADIAN EDGE WEEKLY rounds out the picture, updating you on the latest market intelligence.
- 24/7 updates in U.S. dollars. Track Toronto Exchange quotes with just a 15-minute delay via our Canadian partner, MPL Communications Inc., Canada's largest provider of independent investment advice. All quotes are converted instantly to U.S. $$$ so you don’t have to punch a calculator while you’re trying to concentrate.
- Custom portfolios. Set up your own portfolio—your actual holdings or just a “wish list”—and link it right to Toronto Exchange quotes with our exclusive live feed (converted into U.S. $$$ for you). You always know where you stand with just a 15-minute delay. Our “How They Rate” tables are easy and quick to customize.
- Taxes, currency conversions and more. How will U.S. tax authorities treat your Canadian holdings? How will international currency fluctuations affect their prices? Are oil and gas trusts backed up by reserves in the ground, and how long before they go dry? What about law changes that will lead trusts to revert to corporate status in 2011: threat ... or opportunity? Our White Papers explain these important, sometimes confusing fundamentals—in plain English.
- Broker guide. You’re a U.S. investor and your broker has never heard of Canadian income trusts. Where do you turn? To our BROKER GUIDE, which lists reputable U.S. brokerages that can get you started without charging an arm and a leg.
- Archives. Every article ever published in CANADIAN EDGE, available with a click.
And if that doesn’t do it, how about this: Every CANADIAN EDGE subscriber gets personal access to me. The first thing you learn when you subscribe is how to contact me by e-mail. I answer urgent messages urgently ... and every message promptly, within a day or two. That’s a promise.
When you subscribe, you’ll be directed to the CANADIAN EDGE website and issued your personal secret password that gives you unlimited 24/7 access to everything we publish, from today’s news all the way back to the first issues.
But even before your first website visit, you’ll receive by return e-mail the Canadian Edge Subscriber’s Guide, with everything you need to know to start investing in Canadian income trusts. The Subscriber’s Guide answers all your questions—questions like ...
- How do I find what I’m looking for on your website? The Guide provides concise descriptions of every section and feature.
- How can I find a reputable broker who understands Canadian income trusts and can conduct trades for me quickly, efficiently and at low cost? The Guide names three national U.S. brokerage firms, all well capitalized and widely respected.
- Is a trust ranked 1 always safe? Is a trust ranked 6 always risky? The short answer: Not necessarily. The Guide explains the 1-to-6 safety ranking system, and how to use it so the investments you choose don’t keep you up at night.
- What percentage of my portfolio should I invest in Canadian income trusts? Of course that’s up to each individual investor, but the Guide includes a discussion to help you decide the question for yourself.
- Will I have to turn my earnings over to the tax-man? And which tax-man—U.S. or Canadian? Taxes are a subject of great potential confusion for U.S. investors, but the situation actually is fairly simple. Consult the Guide for authoritative explanations.
- What if I can’t log on or encounter computer problems? It rarely happens, but consult the Guide for a checklist of fixes.
- I know I’ll get buying guidance but ... will you let me know when it’s time to sell? Short answer: Yes, but don’t expect too many “sell” advisories. Most Canadian income trust investments are not speculative—rather, they’re long-term “holds” focused on big dividends, usually paid monthly.
Subscribers Chime In: Portfolio Up 101% to
7 Figures ... Profits Beyond Wildest Dreams ...
In today's market climate, can it be true that well-managed companies, with huge dividends and bright prospects, still exist just to our north? Yes, say the folks who would know ... our subscribers. Here’s just a sampling ...
"The money I’ve spent on CANADIAN EDGE is the best money I have ever spent. I have bought thousands of shares of Canadian trusts, and they have been profitable beyond my wildest dreams."
"I manage my son’s account and it was up 101% last year. My own account is now in the 7 figures and the monthly dividends are just wonderful. Keep up the good work!"
"This is the best advice you have ever produced. You address every aspect of this investment with informative and insightful information ... with the world’s best dividend and growth potential."
—Chuck Smith, a long-time reader
"I am taking care of my mother who is 82 and in a nursing home. Your advice has been able to keep her comfortable [even though] nursing care is so expensive. I now have a great income-producing portfolio that doesn’t dip like the Dow or NASDAQ on bad days and goes up in value almost every day."
So, are you ready to relax into a steady, monthly stream of dividend checks, plus the promise of lip-smacking capital appreciation? Only one market—Canada—offers the high yields and relative safety conservative investors demand ... and only one U.S. information source covers it with the depth of understanding you require. That service is CANADIAN EDGE.
This could be the turnaround opportunity of your investing lifetime. Don’t say no. Take advantage of our 3-Point No-Risk Guarantee and subscribe now.
Editor, Canadian Edge
Subscribe to CANADIAN EDGE today. Choose the plan that best fits your needs—
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Bonus Report #1: Easy Money: Ultra-Safe Canadian Trusts for High Monthly Income. Buy ‘em and forget ‘em—except at the end of the month when the payments roll in! With dividend rates of 8%-10%, these super-trusts are the closest things to bulletproof you can find in today’s roiling markets.
Bonus Report #2: Canada's Best-Kept Secret: Four High-Yielding, Low-Risk Canadian REIT. We’ve seen 68% average profit in Canadian real estate trusts, and the end is not in sight. Learn why real estate is still a terrific and relatively safe investment north of the border in this standout analysis.
TWO-YEAR MONEY-SAVER OPTION—$729
Subscribe for two years, save nearly $300 and get three Special Reports:
Bonus Report #1: Easy Money: Ultra-Safe Canadian Trusts for High Monthly Income. Buy ‘em and forget ‘em—except at the end of the month when the payments roll in! With dividend rates of 8%-10%, these super-trusts are the closest things to bulletproof you can find in today’s roiling markets.Bonus Report #2: Canada's Best-Kept Secret: Four High-Yielding, Low-Risk Canadian REITs. We’ve seen 68% average profit in Canadian real estate trusts, and the end is not in sight. Learn why real estate is still a terrific and relatively safe investment north of the border in this standout analysis.
Bonus Report #3: Oil and Gas Superstars: How to Profit from the China-India Growth Boom. Canadian energy trusts promise jaw-dropping payoffs for investors ready to accept greater risks—170% combined yields in the case of one standout trust. This Bonus Special Report tells you all about this energy play and three others like it.
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To recap, here's what Canadian trusts and U.S. equities give you:
|Canadian Income Trusts
If you're still not sure that Canadian trusts give you the soundest, highest yields anywhere today, please consider—
Q: Of all the G-7 nations, which has the most stable economy?
Q: Which Canadian province saw property values rise 20.1% in 2008?
A: Newfoundland, followed by Prince Edward Island (18%), Saskatchewan (11%), Northwest Territories (6.1%) and Manitoba (5.1%).
Q: Which chairman of the President’s Economic Recovery Advisory Board and ex-chairman of the Federal Reserve (hint: there’s only one) said the U.S. banking system ought to look more like Canada’s?
A: Paul Volcker, speaking in Toronto in February. Yes, Canada. Our friendly, solvent, English- (and French-) speaking neighbor to the north, is not only safe and stable: It’s the go-to source for the most eye-popping dividend yields in the developed world ... or possibly anywhere. To get onboard CANADIAN EDGE, please go here.
Who Am I? Who Are We?
Roger S. Conrad, editor of CANADIAN EDGE, is the leading U.S. authority on Canadian income trusts. He has covered them since inception. His proprietary safety rating system, covering dozens of Canadian income trusts, gives investors the extra level of assurance that’s so helpful when branching out into the unfamiliar.
CANADIAN EDGE is an exclusive advisory from Investing Daily, publisher of the award-winning PERSONAL FINANCE and other news and information advisories serving serious investors with insight and analysis to help build wealth and provide for a safe and secure retirement.