Market Overview

Former Income Trusts Still Great Buys


Given the recent turmoil in the Middle East and higher oil prices, it's no wonder why stocks in the energy sector have skyrocketed over the last year. However, those energy stocks domiciled in Canada may still offer bargains for investors. The former energy trusts are attractive investments for those seeking current income and growth potential. The Canadian tax laws that became effective in 2011 haven't been as disastrous as some analysts expected. Many trusts managed to accumulate “tax pools,” or tax-loss carry-forwards, that should help many former trusts pay no corporate income tax until 2018.

In addition, the strong Canadian loonie gives income seekers a boost. Today, the loonie is worth about $1.05. If you own a stock that pays out $1 Canadian, you're will actually collecting dividends worth $1.05 in greenbacks.

While most of the former trust's yields are nowhere near as high as they were during the crash, they still offer yields in the 4 to 6% range; beating Treasuries. Many of them also kept their former policies of monthly dividends.

For investors looking for a both income and growth potential, Provident Energy (NYSE: PVX), Enerplus (NYSE: ERF) and Penn West Petroleum (NYSE: PWE) offer great plays on the sector.

Posted-In: Canada Energy Trusts OilLong Ideas Dividends Dividends Commodities Trading Ideas


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