Friday, January 29, 2010

High Dividend Canadian Oil Royalty Trusts

Many dividend investors like Canadian Oil Royalty Trusts due to for their high income, their monthly distributions, and possible tax sheltering of their dividends. However, there are fewer trusts to choose from, due to takeovers and termination of payouts for some trusts. These Canadian Income Trusts, also known as Canadian Oil Income Trusts or Canadian Royalty Trusts generally pay a very high income. The trusts pass through all their earnings and deductions from oil and gas wells to the trust holders, similar to real estate investment trusts. There is no taxation at the corporate level since they are structured as trusts. Also, a portion of the dividends may be non-taxable due to depletion and depreciation deductions.

You should be aware that the Canadian government came out with a plan to tax all Canadian trusts at the corporate level beginning in the year 2011. However, the average yield from some of the Canadian trusts is still higher than the U.S. royalty trusts. recently came out with an updated free database list of Canadian Oil Royalty Trusts. Below are a couple of the Canadian Royalty Trusts that are traded on United States stock exchanges.

Baytex Energy (BTE) has a P/E ratio of 28.2, and pays a yield of 7.0%. They have been paying dividends since 2006.

Enerplus Resources Fund (ERF) has a P/E ratio of 13.7, and pays a yield of 9.5%. They have been paying dividends since 2000.

To get a free Excel database list of all the US-traded Canadian Income Trusts, which you can download and sort, go to

Author does not own any of the above. Please note: these high yields are subject to change, reduction, and elimination.


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