Email of the day (1)
Comment of the Day

January 14 2011

Commentary by Eoin Treacy

Email of the day (1)

on a trust conversion:
"Freehold Royalty Trust (FRU.UN) on the Toronto exchange has converted to a Corporation (without lessening its payout). Its new symbol is FRU and I believe if you change to this symbol the chart will update from January 6 where it is now stuck.

"Wonderful service. Much the best I have found. Thank you."

Eoin Treacy's view Thank you for your kind words and for informing us about this reincorporation. While the tax treatment of income trusts has changed, Canada remains a country where respectable yields can be found particularly in the energy sector.

Freehold Royalty Trust currently yields 7.73%. It broke upwards to new recovery highs in October and has improved on that performance considerably over the last few months. It is now somewhat overextended relative to the 200-day MA as it approaches the 2008 peak near C$24. However, a sustained move below the 200-day MA, currently near C$18 would be required to question medium-term upside potential.

This list of 56 S&P/TSX Dividend Aristocrats contains 11 energy related companies and trusts that had not cut their dividends in at least 5 years. It appeared in Comment of the Day on September 16th

Altagas has one of the better yields at 6.06%. It also converted from an income trust to a corporation and has sustained its dividend throughout. The share broke upwards to new recovery highs in July, found support mostly above C$20 and is currently testing the upper side of the three-month range. A sustained move below C$20 would be required to question potential for additional medium-term upside.

Parkland Fuel Corp converted to a corporation this month and lowered its monthly dividend by 2¢. However it still has a respectable indicated yield of 8.85%. It has been ranging above C$10 for more than year and has posted a progression of higher reaction lows since June. These would need to be broken, with a sustained move below $10.50 to question potential for some additional higher to lateral ranging.

The UK listed Middlefield Canadian Income Trusts yields 5.36% and remains in a relatively consistent uptrend. It has sustained a progression of higher reaction lows since March 2009 and a sustained move below 80p would be required to question medium-term upside potential.

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