Canadian Energy & Income Trusts ((Merged thread)), Too good to be true? / & Buying after the Tax-shock Options

[Bubble Pricker]

I have received my first monthly distributions from the trusts I bought in November. There is a 15% Canadian withholding tax applied to the distributions. I have no further tax to pay in the UK, as I hold in a SIPP.

I am bidding to buy PrimeWest (PWI) today.

Later: I bought Primewest and Fording Coal today.

[somadude]

This thread has been a very interesting read as I have been trying to make up my mind about the canadian trusts (in particular, the energy ones).

Have the 1st 2 months of 2007 changed or cemented anyone's take on them?

Also, I see the last contributor was from the UK and he had 15% of a distribution withheld, but had no further tax to pay due to his use of SIPP. As a resident of Ireland, is it safe to assume that I will be subject to the same 15% withholding, and then my own local rate of income tax (investment would not be via any retirement instrument etc).

Cheers.

[chas and dave]

At the moment I feel OK as a UK investor in energy trusts in an ISA (as part of a diversified portfolio).
I learnt about them firstly through this site, so feel I should keep an update going.

Only time will tell if energy is presently expensive or cheap compared to months and years down the line.

My total investment in 8 companies over the last 2-3 months is presently around cost price, and top of his minileague is harvest energy with a 7% gain in share price, c15% net income, whilst income has been constant since feb 06 throught to next two monhs.

I took the path of investigating how regular the income payments have been to date, whether the company has a policy to try and ensure constant payments taking into account energy price fluctuation, plus I ook a serious look at growth and development history and prospects, and life of resource. At the time of buying these had 10-18% incomes, but the best will have diminshed with recent increases in share prices.


My list is as follows
Harvest Energy Trust
Trinidad Energy Services Income Trust
PrimeWest Energy Trust
CCS Income Trust
Fording Canadian Coal
Pengrowth Energy Trust
Penn West Energy Trust
Enerplus Resources Fund

[Bubble Pricker]

Also, I see the last contributor was from the UK and he had 15% of a distribution withheld, but had no further tax to pay due to his use of SIPP. As a resident of Ireland, is it safe to assume that I will be subject to the same 15% withholding, and then my own local rate of income tax (investment would not be via any retirement instrument etc).

The 15% Candian withholding tax applies to all non-Candian residents, so you should assume all income is paid less that 15% tax.

If you do not hold within a special tax wrapper in Ireland, the income will be subject to normal Irish income tax, if you are a resident of Ireland. You MAY be able to deduct the 15% already paid in Candian tax from your Irish tax bill. However, this will depend on the precise provisions in the Irish/Canadian double taxation Treaty, if such a treaty exists.

[Cuthbert Calculu...]

Think I may have found a beauty:

Precision Drilling - an income trust in the oilfield services sector.

PE Ratio 5.73 ; Divident yield of 13.77%

http://www.precisiondrilling.com/

Chart looks to have found a bottom after a Bubb ABC correction and is now sitting on topo of 21 and 55 dmas at a potential inflection point.

CHART

Anyone know it?

[Cuthbert Calculu...]

http://bigcharts.marketwatch.com/quickchar...52342&time=

[grasslizard]

These trusts have fallen sharply over the last few days and are looking very tempting (as they were around Christmas).

Does anyone know whether the sell off is just linked to the general market sell off or if there another reason?

PS enjoyed the latest natural gas CWR show, excellent work.

[deeper]

Penn West is being given away!

[Tim]

I too have been buying the Canroys this week, namely PWI, PWE and HTE. I think these are suffering from the general deleveraging effect, as funds are forced to sell the good with the bad. These are obvious targets as they are liquid and likely to have been part of the carry trade given their high yields.

I am watching the payout ratios and the life of proven and probably reserves. HTE on that front is around 60-70% and around 9yrs.

I think these figures are very promising. I assumeing that part of the remaining 30-40% goes to an exploration budget with the ultimate aim of reclaiming the years as they pass - so for example next year HTE will ideally still have a 9 year life.

Dr Bubb or anyone else do you know how successful they have been at doing this? I notice that HTE has a refinery business which helps diversify and means not all its income is subject to drawing down on reserves. Also PWE has an oil sands project, that could add signicantly to future reserves and revenue.

Anyone like to comment on their favourite picks and benefits of the same. also I am reading that even if the tax changes take place in 2011, some trust eg PWE estimate that for tax reason they will be unaffected til a few years later!?

[TinBrick]

also I am reading that even if the tax changes take place in 2011, some trust eg PWE estimate that for tax reason they will be unaffected til a few years later!?

Interesting. Can you tell us where you read this please?

[Tim]

Interesting. Can you tell us where you read this please?

I can't remember where I saw it, but it has to do with PWE and probably others building up a tax pool, so that they will be unaffected for several years after 2011. Of course its not certain that the tax laws will ever be implemented, the sp's have already discounted this as a certainty, so an added attraction of these trusts is the spice of a repeal.

Even if the law goes ahead, I think many of these trusts are looking at MLP status, altho I'm no expert on this subject by any means. Sorry to be so vague, perhaps someone else can help?

Trusts eye greener pastures, CEO says http://www.theglobeandmail.com/servlet/s...

[Plastic Elastic]

For reasons unbeknownst to me, Penn West is up nearly 5% today. Maybe it's found a bottom after it's been beaten down and down and then some more over the last few months?

The dividend yield is now something like 15%.

[IGBT]

For reasons unbeknownst to me, Penn West is up nearly 5% today. Maybe it's found a bottom after it's been beaten down and down and then some more over the last few months?

Have been keeping an eye on Penn West for a while, looking for a good point to buy for the long term. It’s sub-$27 at the moment which looks good, but with a p/e of over 38 I’m still hesitant.

[Walktothewater]

Have been keeping an eye on Penn West for a while, looking for a good point to buy for the long term. It’s sub-$27 at the moment which looks good, but with a p/e of over 38 I’m still hesitant.

PennWest is my largest single stock holding. Buy it and forget it.

[Newbear]

PennWest is my largest single stock holding. Buy it and forget it.

I agree...and enjoy your regular dividends whilst the natural gas price waits to rise.

[adelaide andy]

This happens to be my largest holding as well. Do any of you guys hold any other trusts. I`m also a holder of Peyto and Daylight resources which are more orientated towards Nat Gas than Oiland NGLs. I think Penn West is 50-50 whereas Daylight has 55-45 in favour of Natgas and Peyto is nearly 100% Natgas.

What i like about daylight are the payout ratio of only around 67%(Recently reduced the divi) but also reported a solid set of results(operating costs in the industry also appear to be coming down) last time out and with the yield still at 16% .

Peyto has very low operating costs(industry leader) and proven long life/high quality reserves of 14years(probably more likely 20years ) Also taking advantage of falling industry costs. The yield is only 10% but takes into account the quality of its reserves. I expect this will get taken out in the not too distant future. They have never decreased the divi and increased it 4 times.

So if you want to play the Natgas story there may be other companies to look at.

Interestingly Penn West shot up at the end of day on huge volume. It will be interesting to see whether there is any carry through from that today.

[adelaide andy]

IGBT....Mcdep has the P/E for the next 12 months at 11.

http://www.mcdep.com/pwt71109.pdf

[Vicarious]

Penn West is my largest holding also, I bought at $36 (owch!) luckily I bought gold ETF's and shares heavily after the Fed's first 50 basis point cut which has covered my loses, I also hold enervest and arc energy as well

(I haven’t been posting much recently as I’ve moved up north for a contract to move some servers over from America for a bank and i'm kipping at a mates house)

[Arn]

For those looking for books

Canadian Income Funds
Your Complete Guide to Income Trusts, Royalty Trusts and Real Estate Investment Trusts
Published 2006

http://books.global-investor.com/books/206...inPtrCode=10002

[Arn]

For Tax check out

http://www.cra-arc.gc.ca/E/pub/tg/t4058/t4058-07e.pdf

Source Canadian Revenue Agency