Don’t invest in COS if you are looking for a stable income stream.
A Year Already?
15 hours ago
Thursday, October 29, 2009
Canadian Oil Sands
Canadian Oil Sands Trust, which owns 37% of the Syncrude Project, raised its quarterly distribution to $0.35 per unit. This represents a 40% increase from the previous distribution of $0.25. Production at COS is un-hedged, therefore distributions are primarily determined by crude oil prices. COS will convert to a corporate structure in late 2010 or early 2011 and continue to pay a dividend that will vary with oil prices.
Wednesday, October 28, 2009
Harvest Banks and Buildings Fund
Harvest Banks and Buildings Income Fund, which is being managed by Avenue Investment Management, will invest primarily in Banks and REITs. It is designed to pay a monthly distribution of $0.07 per months, representing a yield of 7% based on the issue price of $12. The units will trade on the TSX under the symbol HBB. The Fund will convert to an open-ended mutual fund in October 2011.
This is a very interesting offering to say the least.
Recommendation: BUY when the Fund is trading below NAV
Tuesday, October 27, 2009
Gaelen Morphet leaves CIBC
After almost a decade at CIBC, Gaelen Morphet and her team leave to join Empire Life Insurance Co. Morphet will be Empire's new Chief Investment Officer. David Graham, Luc de la Durantaye and Domenic Monteferrante will take over.
Funds affected include:
Funds affected include:
- CIBC Balanced
- CIBC Canadian Equity Value
- CIBC Dividend Income
- Renaissance Canadian Balanced Value
- Renaissance Canadian Core Value
- Renaissance Canadian Dividend Income
- Renaissance Canadian Monthly Income
- Renaissance Diversified Income
- Renaissance Dividend
Monday, October 26, 2009
RioCan makes U.S. Acquisition
RioCan made its first major U.S. acquisition by forming an 80/20 joint venture and buying a 15% stake in Cedar Shopping Centers. The deal is valued at US$181 million.
Shaw's Q4 Results
In summary, these are yet again very strong operating and financial results from Canada's premier cableco. Given our confidence in Shaw's continued execution, we see Shaw as a strong buy-and-hold story and rate the shares at Sector Outperformer (Top Pick) with a $24 price target.
Robert Bek, CIBC World Markets
Highlights:
- Strong growth across all product lines
- Potential wireless partnership with Rogers
- Strong guidance for 2010
Shaw Communications is a premier dividend growth stock. The shares currently yield 4.2%.
Sunday, October 25, 2009
Nestle: Sweet Dividend Growth
Pros:
- Dividend Growth of 15% per year
- Global reach and growth from emerging markets
- Large product portfolio
- Low volatility
- Good diversifier/compliment to a Canadian equity portfolio
Cons:
- The Dividend is paid only once a year (April)
- Currency risk (the shares trade in Swiss Francs)
- No Dividend Tax Credit on this one
- Your Cash Flow Stream YoY in Canadian dollars will fluctuate
Best Income Trusts Post 2011
As 2011 nears, there are still a few trusts out there that offer great current yields and good growth prospects going forward. Some of trust have already converted (Crescent Point), while others have unveiled plans (AltaGas will convert in June 2010 with a reduced payout) and others plan to preserve their distributions (Pembina Pipeline).
Independent analyst Harry Levant of IncomeTrustResearch.com, highlighted a few of his favourites in a recent Globe & Mail article. (Names in bold are top picks)
Independent analyst Harry Levant of IncomeTrustResearch.com, highlighted a few of his favourites in a recent Globe & Mail article. (Names in bold are top picks)
- AltaGas
- A+W Royalty
- Armtec Infrastructure
- Bell Aliant
- Bonavista Energy
- Boston Pizza
- Brookfield Renewable Power
- Calloway REIT
- Canadian Oil Sands
- Canadian REIT
- CAP REIT
- CML Healthcare
- Cineplex
- Davis + Henderson
- Enbridge Income Fund
- Firm Capital
- Fort Chicago
- Gaz Metro
- H+R REIT
- Inter Pipeline
- K-Bro Linen
- Keyera Facilities
- Liquor Stores
- Morneau Sobeco
- Pembina Pipeline
- RioCan
- Vermilion
Sunday, October 18, 2009
Looking into Freehold
- Focused on oil and gas royalties
- Large, diversified land base
- Low risk profile and conservative financial management
- CN Pension Trust owns ~ 23% of the units
Sell Yellow Pages
Debt-laden Yellow Pages searches for growth
Original article published by Susan Krashinsky (Globe & Mail) on Oct. 16, 2009
Key Takeaways:
- 30% Distribution Cut in May 2009
- $3.3 Billion in Debt
- Units are down 67% since 2006
- Print media is a declining industry
- Online advertising is very competitive
- Minimal growth opportunities going forward
“Yellow Pages usage among people, say, below 50, will drop to zero – near zero – over the next five years.” - Bill Gates in 2007
The only positive for the company is its near monopoly in the directories business in Canada (93% Market Share).
Yellow Pages is a SELL
Friday, October 16, 2009
Inter Pipeline Fund
Why Inter Pipeline Fund will pay off
Larry MacDonald ::: Globe and Mail ::: Oct. 14, 2009
One good idea
Inter Pipeline Fund (IPL.UN)
The source
Peter Brieger, chief executive officer and managing director of Toronto-based GlobeInvest Capital Management
The idea
Buy units of Inter Pipeline Fund
Who's it for
Inter Pipeline Fund, a Calgary-based limited partnership, will appeal to investors who want “income and reasonably conservative growth,” says Mr. Brieger. The units pay a monthly distribution of 7 cents for a current yield of 9 per cent, and have a potential for capital-gains appreciation from exposure to expanding areas in the energy-infrastructure industry (PROFIT Magazine recently rated the partnership the 57th fastest growing company in Canada over the past five years).
The distribution is well supported by the partnership's cash flow, which is derived mostly from regulated sources and long-term contracts with creditworthy customers. These stable and secure sources of cash flow also provide substantial immunity to the economic cycle, which may be of interest to defensive investors and those uncertain of “the longevity of any economic recovery.”
What exactly does Inter Pipeline do?
Inter Pipeline has “four key operating segments: conventional oil pipelines (32 per cent of cash flow), extraction of liquids from natural gas (30 per cent), oil-sands transportation (24 per cent), and bulk-liquid storage (14 per cent).” It operates in western Canada and Europe.
Why it's a good idea
Management “expects the fastest growth from the oil-sands transportation business, which should be about 53 per cent of total cash flow by 2011. Inter Pipeline can double the capacities for its Cold Lake and Corridor oil-sands pipelines by 2015 with only modest additional capex [capital expenditures], thus providing strong positive leverage for the cash flow from that segment of the business,” Mr. Brieger says.
“Its conventional pipeline business … represents 17 per cent of Western Canadian conventional volumes; while management estimates a long-term 4-per-cent decline rate in volumes, that decline is offset by rising tariffs – thus providing long-term stability to this segment of the business,” he adds.
“Its bulk-liquid storage business is located mainly in the U.K. and Germany; at a current 97-per-cent capacity utilization rate, one can expect further additions and growth.”
The natural-gas liquids division extracts ethane, propane, butane and other liquids from natural gas. It currently processes about 40 per cent of natural gas exported from Alberta. “This business can be expanded with only modest capex additions,” Mr. Brieger believes.
At the macro-level, Inter Pipeline faces a “favourable five-year outlook for oil prices.” Demand is rising thanks to the industrialization of China and other emerging economies, while supply remains tight.
Expected return
“With a current, sustainable yield near 9 per cent and our target one-year capital gain of about 8 per cent, GlobeInvest Capital thinks a one-year target total return of 17 per cent will prove to be attractive to a large segment of the investing public,” Mr. Brieger estimates. And there is a high “probability of reaching the target total return [considering] target income exceeds 50 per cent of the target total return.”
Some of the risks
Inter Pipeline is scheduled to become taxable as a corporation in 2011, which poses the risk of reduced distributions. However, Mr. Brieger feels “the distributions can be sustained post 2011 as the incremental cash flow from the oil-sands pipelines will more than cover any future taxes.”
The natural-gas liquid extraction division is sensitive to price differentials between natural-gas prices and the prices at which the liquids can be sold (i.e. ‘frac' spreads). Nevertheless, the average spread in the market is currently well above the “15-year average spread of about 31.7 cents (U.S.).”
Another possible risk is that tariff increases may not keep pace with inflation (if it accelerates) or with declines in shipments of oil from Alberta.
Why listen to Mr. Brieger
Mr. Brieger has spent more than 45 years in the investment business as a research analyst, market strategist, and portfolio manager. He founded portfolio-management firm GlobeInvest Capital Management in 1988, is a Chartered Financial Analyst (CFA), and regularly appears as a guest on Business News Network (BNN).
Larry MacDonald ::: Globe and Mail ::: Oct. 14, 2009
One good idea
Inter Pipeline Fund (IPL.UN)
The source
Peter Brieger, chief executive officer and managing director of Toronto-based GlobeInvest Capital Management
The idea
Buy units of Inter Pipeline Fund
Who's it for
Inter Pipeline Fund, a Calgary-based limited partnership, will appeal to investors who want “income and reasonably conservative growth,” says Mr. Brieger. The units pay a monthly distribution of 7 cents for a current yield of 9 per cent, and have a potential for capital-gains appreciation from exposure to expanding areas in the energy-infrastructure industry (PROFIT Magazine recently rated the partnership the 57th fastest growing company in Canada over the past five years).
The distribution is well supported by the partnership's cash flow, which is derived mostly from regulated sources and long-term contracts with creditworthy customers. These stable and secure sources of cash flow also provide substantial immunity to the economic cycle, which may be of interest to defensive investors and those uncertain of “the longevity of any economic recovery.”
What exactly does Inter Pipeline do?
Inter Pipeline has “four key operating segments: conventional oil pipelines (32 per cent of cash flow), extraction of liquids from natural gas (30 per cent), oil-sands transportation (24 per cent), and bulk-liquid storage (14 per cent).” It operates in western Canada and Europe.
Why it's a good idea
Management “expects the fastest growth from the oil-sands transportation business, which should be about 53 per cent of total cash flow by 2011. Inter Pipeline can double the capacities for its Cold Lake and Corridor oil-sands pipelines by 2015 with only modest additional capex [capital expenditures], thus providing strong positive leverage for the cash flow from that segment of the business,” Mr. Brieger says.
“Its conventional pipeline business … represents 17 per cent of Western Canadian conventional volumes; while management estimates a long-term 4-per-cent decline rate in volumes, that decline is offset by rising tariffs – thus providing long-term stability to this segment of the business,” he adds.
“Its bulk-liquid storage business is located mainly in the U.K. and Germany; at a current 97-per-cent capacity utilization rate, one can expect further additions and growth.”
The natural-gas liquids division extracts ethane, propane, butane and other liquids from natural gas. It currently processes about 40 per cent of natural gas exported from Alberta. “This business can be expanded with only modest capex additions,” Mr. Brieger believes.
At the macro-level, Inter Pipeline faces a “favourable five-year outlook for oil prices.” Demand is rising thanks to the industrialization of China and other emerging economies, while supply remains tight.
Expected return
“With a current, sustainable yield near 9 per cent and our target one-year capital gain of about 8 per cent, GlobeInvest Capital thinks a one-year target total return of 17 per cent will prove to be attractive to a large segment of the investing public,” Mr. Brieger estimates. And there is a high “probability of reaching the target total return [considering] target income exceeds 50 per cent of the target total return.”
Some of the risks
Inter Pipeline is scheduled to become taxable as a corporation in 2011, which poses the risk of reduced distributions. However, Mr. Brieger feels “the distributions can be sustained post 2011 as the incremental cash flow from the oil-sands pipelines will more than cover any future taxes.”
The natural-gas liquid extraction division is sensitive to price differentials between natural-gas prices and the prices at which the liquids can be sold (i.e. ‘frac' spreads). Nevertheless, the average spread in the market is currently well above the “15-year average spread of about 31.7 cents (U.S.).”
Another possible risk is that tariff increases may not keep pace with inflation (if it accelerates) or with declines in shipments of oil from Alberta.
Why listen to Mr. Brieger
Mr. Brieger has spent more than 45 years in the investment business as a research analyst, market strategist, and portfolio manager. He founded portfolio-management firm GlobeInvest Capital Management in 1988, is a Chartered Financial Analyst (CFA), and regularly appears as a guest on Business News Network (BNN).
Dividend Funds versus TSX
Taking a look a the performance of Dividend Funds with a 10-year track record, it isn't surprising to that a few of them outperform the S&P/TSX. This is even after deducting their management fees (MER) !!!
If you are looking for a Dividend Fund, I'd recommend PH+N Dividend Income. Besides the strong track record, the fund has a low MER of 1.11%.
If you are looking for a Dividend Fund, I'd recommend PH+N Dividend Income. Besides the strong track record, the fund has a low MER of 1.11%.
Cineplex and Vermilion
Oscar Belaiche shifts his yield strategy toward equities
by Sonita Horvitch ::: Morningstar Canada ::: 07 Oct 2009
Vermilion Energy Trust exemplifies "quality at a reasonable price," and Cineplex Galaxy gets favourable review for revenue growth.
Oscar Belaiche, vice-president and portfolio manager at Toronto-based Goodman & Co., Investment Counsel Inc., has been boosting the equity portion of the seven-month-old Dynamic Strategic Yield, of which he is co-lead manager.
"We have been selectively adding equities to this fast-growing high-income fund as the economy is showing signs of recovery," says Belaiche. Of the asset mix, he notes: "When we launched Dynamic Strategic Yield, there was a huge buying opportunity in fixed-income securities, such as investment-grade corporate bonds and high-yield bonds." At that time, he says, the fixed-income market was pricing in a depression.
Belaiche's initial portfolio had two-thirds in fixed income and one-third in equities. "Since then, we have been moving to a more neutral equity/fixed-income asset allocation, by applying new money coming into the fund to equities." At the end of August, Dynamic Strategic Yield held 44.1% in bonds, 45.4% in equities and 10.5% in cash.
As part of its income-generating line-up of funds, Goodman & Co. launched Dynamic Strategic Yield on March 1 and Dynamic Strategic Yield Class, a "tax-efficient version" of this fund, on July 13. The two funds now have combined assets of more than $550 million.
A specialist in income-producing equities, Belaiche and his team manage the equity component of Dynamic Strategic Yield. Colleague Michael McHugh and his team are responsible for the fixed-income segment.
At the end of August, this fund held 10.9% in Canadian equities -- "primarily banks, pipelines and telecom stocks, all dividend-paying stocks." Income trusts constituted 13.4% of the total portfolio and real estate investment trusts (REITs) represented 5.6%, for a combined 19% in trusts.
Belaiche is one of the few surviving major players in the shrinking universe of Canadian income trust mutual funds. His Dynamic Focus+ Diversified Income, originally named Dynamic Focus + Diversified Income Trust when launched in 2001, has more than $1 billion in assets.
"The change in the tax treatment of income trusts, except REITs, which comes into effect in 2011, has put a question mark over the viability of some trusts," says Belaiche. Canadian business trusts have proven to be the most vulnerable of the income trust categories, he says. "A number of the smaller trusts could be acquired or taken private prior to 2011."
Other income-trust categories, such as energy and infrastructure/utilities trusts, are generally in better shape, he says. In Dynamic Strategic Yield's portfolio, the largest energy equity holding is Vermilion Energy Trust, at 2.8% of the fund.
This oil and gas royalty trust is a prime example, says Belaiche, of the equities that he and his team invest in. "We look for best-in-class management, stable businesses, strong balance sheets, good profitability, high cash-flow generation and sustainable dividends/distributions." His well-honed discipline is QARP or "quality at a reasonable price."
Vermilion's management team is underestimated, says Belaiche. "This trust, with an international reach, has consistently grown through acquisition, without dilution to the unitholders." He notes that the trust, which has $2.1 billion in market capitalization, recently acquired an 18.5% interest in the Corrib gas field off the northwest coast of Ireland. Corrib is expected to generate significant operating cash flow when it comes on stream.
Belaiche says Vermilion plans to convert to a corporation by the fall of 2010. "Most importantly, this trust, intends to maintain its distribution/dividend post-conversion, which will protect investors' cash flow." Vermilion's estimated distribution per unit for 2009 is $2.28.
A larger-cap business trust that is "expected to maintain its distribution/dividend post 2011" is Cineplex Galaxy Income Fund, says Belaiche. This trust, which has a market capitalization of $900 million, is the dominant movie-theatre chain in the country. Cineplex Galaxy currently has some two-thirds of Canadian box-office revenues. It is, he says, a prime example of "the quality business trusts in the portfolio."
Cineplex Galaxy is, he says, successfully expanding its sources of revenue through, for example, increased advertising in its theatres and alternative programming, such as opera movies. The trust's payout ratio for 2009 is estimated at 60%, which is "certainly modest." The estimated distribution per unit for 2009 is $1.26.
Turning to REITs, Belaiche notes that he has a "small position" in H&R Real Estate Investment Trust, which owns a portfolio of North American properties. This Canadian REIT has a market capitalization of $2.1 billion and is currently building EnCana Corp.'s new headquarters, The Bow, a two-million-square-foot building in downtown Calgary.
"H&R ran into difficulties earlier this year with the financing of this project, but has successfully resolved this and is now fully funded to complete construction," says Belaiche. "This has removed an albatross from around H&R's neck," he says, yet the REIT still trades at a discount to its peers.
Of the Canadian banks, Belaiche says that they are "among the few around the world that skated so well through the financial crisis and have been able to maintain their dividends."
His two key holdings are Royal Bank of Canada and Toronto-Dominion Bank "as I consider that they have the strongest business platforms." Based on their recent closing stock prices, Royal's dividend yield is 3.5%, as is TD's. "I started buying these stocks when the fund was launched in the spring and bank stocks were in the doldrums," Belaiche says. "This has worked out well as they have rebounded strongly since."
by Sonita Horvitch ::: Morningstar Canada ::: 07 Oct 2009
Vermilion Energy Trust exemplifies "quality at a reasonable price," and Cineplex Galaxy gets favourable review for revenue growth.
Oscar Belaiche, vice-president and portfolio manager at Toronto-based Goodman & Co., Investment Counsel Inc., has been boosting the equity portion of the seven-month-old Dynamic Strategic Yield, of which he is co-lead manager.
"We have been selectively adding equities to this fast-growing high-income fund as the economy is showing signs of recovery," says Belaiche. Of the asset mix, he notes: "When we launched Dynamic Strategic Yield, there was a huge buying opportunity in fixed-income securities, such as investment-grade corporate bonds and high-yield bonds." At that time, he says, the fixed-income market was pricing in a depression.
Belaiche's initial portfolio had two-thirds in fixed income and one-third in equities. "Since then, we have been moving to a more neutral equity/fixed-income asset allocation, by applying new money coming into the fund to equities." At the end of August, Dynamic Strategic Yield held 44.1% in bonds, 45.4% in equities and 10.5% in cash.
As part of its income-generating line-up of funds, Goodman & Co. launched Dynamic Strategic Yield on March 1 and Dynamic Strategic Yield Class, a "tax-efficient version" of this fund, on July 13. The two funds now have combined assets of more than $550 million.
A specialist in income-producing equities, Belaiche and his team manage the equity component of Dynamic Strategic Yield. Colleague Michael McHugh and his team are responsible for the fixed-income segment.
At the end of August, this fund held 10.9% in Canadian equities -- "primarily banks, pipelines and telecom stocks, all dividend-paying stocks." Income trusts constituted 13.4% of the total portfolio and real estate investment trusts (REITs) represented 5.6%, for a combined 19% in trusts.
Belaiche is one of the few surviving major players in the shrinking universe of Canadian income trust mutual funds. His Dynamic Focus+ Diversified Income, originally named Dynamic Focus + Diversified Income Trust when launched in 2001, has more than $1 billion in assets.
"The change in the tax treatment of income trusts, except REITs, which comes into effect in 2011, has put a question mark over the viability of some trusts," says Belaiche. Canadian business trusts have proven to be the most vulnerable of the income trust categories, he says. "A number of the smaller trusts could be acquired or taken private prior to 2011."
Other income-trust categories, such as energy and infrastructure/utilities trusts, are generally in better shape, he says. In Dynamic Strategic Yield's portfolio, the largest energy equity holding is Vermilion Energy Trust, at 2.8% of the fund.
This oil and gas royalty trust is a prime example, says Belaiche, of the equities that he and his team invest in. "We look for best-in-class management, stable businesses, strong balance sheets, good profitability, high cash-flow generation and sustainable dividends/distributions." His well-honed discipline is QARP or "quality at a reasonable price."
Vermilion's management team is underestimated, says Belaiche. "This trust, with an international reach, has consistently grown through acquisition, without dilution to the unitholders." He notes that the trust, which has $2.1 billion in market capitalization, recently acquired an 18.5% interest in the Corrib gas field off the northwest coast of Ireland. Corrib is expected to generate significant operating cash flow when it comes on stream.
Belaiche says Vermilion plans to convert to a corporation by the fall of 2010. "Most importantly, this trust, intends to maintain its distribution/dividend post-conversion, which will protect investors' cash flow." Vermilion's estimated distribution per unit for 2009 is $2.28.
A larger-cap business trust that is "expected to maintain its distribution/dividend post 2011" is Cineplex Galaxy Income Fund, says Belaiche. This trust, which has a market capitalization of $900 million, is the dominant movie-theatre chain in the country. Cineplex Galaxy currently has some two-thirds of Canadian box-office revenues. It is, he says, a prime example of "the quality business trusts in the portfolio."
Cineplex Galaxy is, he says, successfully expanding its sources of revenue through, for example, increased advertising in its theatres and alternative programming, such as opera movies. The trust's payout ratio for 2009 is estimated at 60%, which is "certainly modest." The estimated distribution per unit for 2009 is $1.26.
Turning to REITs, Belaiche notes that he has a "small position" in H&R Real Estate Investment Trust, which owns a portfolio of North American properties. This Canadian REIT has a market capitalization of $2.1 billion and is currently building EnCana Corp.'s new headquarters, The Bow, a two-million-square-foot building in downtown Calgary.
"H&R ran into difficulties earlier this year with the financing of this project, but has successfully resolved this and is now fully funded to complete construction," says Belaiche. "This has removed an albatross from around H&R's neck," he says, yet the REIT still trades at a discount to its peers.
Of the Canadian banks, Belaiche says that they are "among the few around the world that skated so well through the financial crisis and have been able to maintain their dividends."
His two key holdings are Royal Bank of Canada and Toronto-Dominion Bank "as I consider that they have the strongest business platforms." Based on their recent closing stock prices, Royal's dividend yield is 3.5%, as is TD's. "I started buying these stocks when the fund was launched in the spring and bank stocks were in the doldrums," Belaiche says. "This has worked out well as they have rebounded strongly since."
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