“Up To 16% Yields … From Steady, Cash-Rich Companies” — Roger Conrad

Solutions to Canadian Edge teasers

By Travis Johnson, Stock Gumshoe, October 19, 2009

Many of you have heard of Roger Conrad, he runs a few newsletters that are largely focused on income, including Utility Forecaster and Canadian Edge, both of which have been ranked pretty highly by my readers (you can see their reviews here) — this tease of his is for Canadian Edge, a newsletter that focuses on Canadian income trusts/royalty trusts/business trusts, so it won’t surprise you to hear that the companies teased are all of that flavor.

But he does pick a few interesting ones — not just oil and gas, which are the mainstays of the trust world, but some others, too … so let’s see what they are, shall we?

First, a bit of his pitch:

“Who couldn’t use an extra paycheck every month?

“If you’re closing in on retirement or just want to grow your nest egg really fast, stashing it under the mattress is not an option.

“Fortunately, you do have another option: You can get up to 16% yields right now from steady, cash-rich businesses.

“Stable, solid businesses that pay you monthly. Like a paycheck.

“I’m talking about safe, dependable, Canadian trusts — probably the best income generator on the planet. And the best news is this: right now, you can snap up these rock-solid businesses at bargain rates.”

OK, so I’ll be the one to stand up and say it first … yes, I could use an extra paycheck every month. And I promise not to blow it all on comic books and chewing gum. So how do I get it?

“You get near-perfect safety and up to 16% dividends. With all the talk about shrinking dividends, you should know that we have 18 (out of 19) holdings with dividends that have never been cut.”

That one of the 19 that has been cut? That’s the one I wrote about for a similar teaser back in January, for the Yellow Pages Income Fund — if you’ve seen the teaser, that’s the “Google partner” that has a 15% yield. It’s down a bit from the price it was teased at in January, in part because they cut the dividend, but it does currently have a yield of about 14.3%. You can see my original comments about it here if you’re interested, I still think it’s a dying business like Idearc and R.H. Donnelly and will probably go in much the same direction, stock-wise, but they are in better fiscal shape and you might just wring a few more years of decent dividends out of them first, I don’t know.

But Conrad teases a handful of trusts right now, so let’s have a look for some more new ones. First, if you don’t know what these trusts are, I’ll let him explain it in his own words:

“Canadian income trusts are pass-through entities. That is, they pass almost all their profits through to you, the shareholder, in the form of dividends. In that sense they resemble U.S. real estate investment trusts (REITs) — except that the Canadian trusts must pass through a greater percentage of profits to shareholders than U.S. REITs are required to do — up to 85%.

“The trusts were created by law, initially to benefit oil and gas industries, a backbone of the Canad