Wednesday, June 23, 2010

Top Yielding Canadian Oil Royalty Trusts

The Canadian Oil Royalty Trusts have been popular due to their high income, their monthly distributions, and possible tax sheltering of their dividends. However, these trusts have become scarce, due to takeovers and termination of payouts for some trusts. In addition, some companies have converted to regular operating businesses.

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. just updated its free database list of Canadian Oil Royalty Trusts, six of which yield more than 7%. Below are a couple of the Canadian Royalty Trusts that are traded on United States stock exchanges.

Baytex Energy (BTE), based in Calgary, has a P/E ratio of 25.7, and pays a yield of 7.3%. The company was founded in 1993.

Another Calgary company, Enerplus Resources Fund (ERF), has a P/E ratio of 34.5, and pays a yield of 8.7%. The company was founded in 1986.

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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