The High Dividend Stock Investor's Collapsing Dollar Survival Guide, Part 1

EXECUTIVE SUMMARY FOR THIS SERIES

High-yield stocks are a form of cash. Thus inflation eats away at both yield and principle. As governments inflate their money supply to ease credit, most oberservers believe inflation is inevitable.

In this series we explore:

• The current state of the market
• The case for and against the dollar's demise
• Recommended criteria for selecting high dividend stocks that also give a hedge against the U.S. dollar's likely impending depreciation.

Specific stock market hedges and high dividend stocks that are inflation-resistant mentioned below include:

GENERAL MARKET HEDGES

UltraShort S & P 500 Proshares (SDS) ,UltraShort Financials ProShares (SKF), UltraShort QQQ ProShares (QID), UltraShort Real Estate ProShares (SRS), UltraShort Russell2000 ProShares (TWM)

INTERNATIONAL

Big Oil

BP, plc (BP), CNOOC Ltd. (CEO) , Eni SpA (E), Total Fina Elf (TOT)

Utilities

Veolia Environmental SA (VE), ENEL-SOCIETA PER AZI (ESOCF.PK) or (ENLAY.PK)

Shipping

Nordic American Tanker (NAT), Seaspan Corp (SSW)

Canadian Oil/Gas Energy Income Trusts

Advantage Energy Income Fund (AAV), Enerplus Resources Fund (ERF), Peyto Energy Trust (PEYUF.PK), Provident Energy Trust (PVX), Vermillion Energy Trust (VETMF.PK)

Canadian Clean Energy Income Trusts

Energy Savings Income Fund (ESIUF.PK), Innergex Power Income Fund (INRGF.PK), Macquarie Power & Infrastructure (MCQPF.PK), Great Lakes Hydro Income Fund (GLHIF.PK)

Canadian Energy Infrastructure Income Funds

Altagas Income Trust (ATGFF.PK), Pembina Pipeline Fund (PMBIF.PK)

Canadian Utility Income Trusts

Atlantic Power Corporation (ATPWF.PK) and some very positive clarification from their CFO Mr. Patrick Welch, Bell Aliant (BLIAF.PK)

Canadian Health Care Income Trust

CML Healthcare Inc. Fund (OTC:CMHIF, TSX: CLC.UN)

Canadian Real Estate Income Trusts

Canadian Apartment Properties REIT(OTC: CDPYF, TSX: CAR.UN), Northern Property REIT (NPRUF.PK), RIOCAN REIT: (RIOCF.PK)

Canadian Misc Business Trusts

Yellow Pages Income Fund (YLWPF.PK)

UNITED STATES

Communications

AT&T Inc (T), Verizon (VZ), Otelco (OTT), Windstream Corp (WIN)

Energy Infrastructure Master Limited Partnerships (MLPs)

Buckeye Partners (BPL), El Paso Pipeline Partners (EPB), Enterprise Products Partners (EPD), Energy Transfer Partners (ETP), Kinder Morgan Energy Partners (KMP), Magellan Midstream Partners (MMP), Nustar Energy (NS), ONEOK Partners (OKS), Sunoco Logistics Partners (SXL), TEPPCO Partners (TPP),Tortoise Energy Infrastructure Partners(TYG)

Coal MLPs

Alliance Resource Partners (ARLP), Northern Resource Partners (NRP), Penn Virginia Resources Partners (PVR)

Other MLPs

Terra Nitrogen Company, L.P. (TNH), StoneMor Partners (STON)

Utilities

Dominion Resources Inc. (D), Duke Energy Corp (DUK), Progress Energy (PGN), Southern Company (SO)

CURRENT MARKET STATUS

Before ever considering investing in stocks, we must always first look at the overall market, since almost all stocks follow the major indices.

1. The Short Version

Still trending down, invest only funds not needed for the near term expenses. While there may be rallies, even multi-week or month ones, the fundamental problems remain and there is no credible plan to fix them at this time. News driven and thus even more unpredictable than usual.

In sum, bargains galore, but only for cash allocated to generate income, not near term living expenses. Long positions remain more at risk of declining before they appreciate, at least until credit issues appear to be healing. New long positions could also let you catch a multi day or week rally and, for the traders among you, a chance for a quick 10% or more profit taking.

2. A Summary of Recent Events

If you haven’t been following the market, here’s the essence of what’s happened since the ten-year lows of late November. There’s a decelerating downtrend that may or may not signal a bottoming.

1. The Good: So Much Wonderful Gloom

Ironically, the best news is the overwhelmingly bearish sentiment. This is bullish, since it suggests there’s lots of pent-up buying cash to provide the fuel to power the market higher.

2. The Bad

In my December article, Top Energy Infrastructure MLPs…” (see “The Islamic-Russian Wildcard Bonus?” in my December article "Top Energy Infrastructure MLPs..."), I briefly discussed how Islamic terror and its sponsors could be depended on to provide a degree of support to energy stock prices by posing both long and short term risk to energy supplies. They continue to deliver faithfully on this threat.

In early February, Iran launched its first satellite. This means that Iranian nukes are no longer just Israel’s problem (surprise!). If Iran has a rocket powerful enough to heave a satellite into space, that same rocket can also toss a nuke into Europe, possibly beyond. For more on the ramifications, (all bad except for energy prices and for energy suppliers located outside the Middle East) for the West and its energy supply line, see Craig Karpel’s excellent article Iran's Strategic Nuclear Deception.

The Ayatollahs are rather “old school” about how one conveys strength, and (correctly) view Obama’s desire for “dialogue” as weakness, not strength. This is dangerous. The last time the Mullahs saw the U.S. President to be a wimp, (the failed Jimmy Carter) they took full advantage of him to expand their own influence and to humiliate the U.S. They won’t be any better with nuclear missiles, and can be expected to do all they can to threaten Western energy supplies.

3. The Ugly

The market revisits November lows. At best it’s part of the bottoming process, or setting the stage for a near term rally. However, it could signal the next stage down. In the context of an established down trend, that’s how you bet until the evidence says otherwise.

Unfortunately, the evidence suggests more downside. As Tobin Smith recently pointed out, share prices in previous market crashes did not hit bottom until traditional valuation metrics like dividend yields and P/E ratios reached oversold extremes. According to these, the S&P 500 Index (i.e. the overall U.S. stock market) is still 20% to 40% above “market-bottom-capitulation” extremely oversold prices. Here’s why:

• Dividend Yields: While at a multi-year high of 3.5%, are still only 25% - 50% of the levels hit during the major crashes of the Great Depression, World War II, and the 1970s.

• P/E Ratios: The Price to Earnings Ratio represents the multiple investors are willing to pay for a dollar of earnings. Historically it sinks to 10 to 12 times earnings or lower before the market begins a sustained uptrend. Per Standard and Poor's estimates, it was over 16 times earnings in Q4 of 2008, will be over 14 times in Q1 of 2009, and could get as high as 18 times earnings by year end. Though the S&P 500 Index is around a ten year low, earnings in 1997 were 25% higher than those forecast for 2009.

Thus, it’s quite possible that stocks are yet due for a further drop of 20% or more.

Of course, that drop won’t be permanent, and will be difficult to time, as will the recovery. Meanwhile, U.S. treasury securities and the like pay us virtually nothing and provide no hedge against inflation or a weakening of the dollar.

Thus, those of us needing to generate income need to consider taking at least partial positions in high dividend stocks.

C. Ramifications for High Dividend Stock Investors

In sum, we’re still in a near term trading range, with the overall trend continuing down. Continue to invest only with funds allocated for longer term investment that you don’t need for the next six to eighteen months at least. What you buy now may well go lower.

1. Consider a Partial Hedge with Selected Ultrashort ETFs

In addition to collecting high yields, those seeking a more active hedge may wish to consider taking measured positions in some of the Ultrashort Proshares ETFs as a partial hedge. For the unfamiliar, these are ETFs that move at twice the inverse of a selected sector of stocks. Thus, for example, if the S&P 500 index falls 1%, then SDS, its Ultrashort ETF, will rise by 2% (and vice versa). By nature these are volatile, so unless you like technical analysis and market timing, try to buy these only as a partial hedge at strong support when the market has just stopped feeling very optimistic, as a rally begins to show signs of fading. I’ll discuss these in detail in the near future, and compare them to other means of hedging to protect your principle. For now, however, consider taking partial positions in the following.

• UltraShort S & P 500 Proshares - Buy under $75, Strong Buy under $65
• UltraShort Financials ProShares - Buy Under $141; Strong Buy below $125
• UltraShort QQQ ProShares – Buy Under $55, Strong Buy under $50
• UltraShort Real Estate ProShares – Buy Under $58, Strong Buy under $48
• UltraShort Russell2000 ProShares – Buy Under $75, Strong Buy under $65

If you look at a chart for these, you’ll note my buys are very conservatively low. There is a lot of cash on the sidelines now, earning virtually nothing. Big players and insiders continue buying stocks we’ve been mentioning, because they’re clearly cheap and excellent long term values. As the past few months have shown, any glimmer of positive news brings buyers as everyone is waiting for the sign to jump in. Lots of cash on the sidelines will provide lots of fuel in the tanks for a rally.

If that happens, these ultrashorts can plummet fast, so you only want to buy them at strong support, so that if these levels don’t hold up you’ll know quickly and can get out before taking a big loss.

Thus, place sell stops no more than 10% below the Strong Buy levels to protect your capital. There are other Ultrashorts for other sectors, like the Ultrashort Oil and Gas DUG for shorting oil and gas. This one has been popular, but energy seems far closer to a bottom than a top, so avoid this one.

2. Continue to Take Partial Positions at Our Recommended Strong Support Levels

Beyond the Ultrashort ETFs, if you can earn reliable dividends from 8-12 percent or more while you wait for recovery, ongoing investment makes sense. You just need to find the best bargain priced quality high yield stocks, and collect your income while waiting for the market to improve and offer additional options. As noted above, with a confirmed downtrend and good evidence for a further 20% overall drop, refer to our below recommended buy levels, which are at strong support levels.

3. Use Sell Stops?

While our emphasis is buy and hold as long as the distribution is safe and fundamentals hold steady, some may want to hedge their bets, especially if they may need the cash within the next year or so. Those in that position should consider using sell stops around 15% below the Strong Buy price as partial principle protection, though you risk getting knocked out of your positions, only to see them come back soon and possibly rise higher while you miss the dividend. It’s a judgment call, though not a bad one, for at least some of your holdings given the current pessimism (which of course can change fast).

Again, our focus is on getting high yields from healthy businesses whose price will recover while we earn outsized returns, and we don’t try to time the market too much.

In this article, I begin a brief series on high dividend stocks that also protect us against a weakening U.S. dollar, and possibly weakening currencies in general.

Now let’s briefly consider the case for and against the U.S. dollar, as well as what might replace it.

THE CASE FOR AND AGAINST THE US DOLLAR

There is a consensus in the investment community that the U.S. dollar is in trouble. While there’s a lot you can read on the topic, here are two excellent, provocative articles from my fellow seeking alpha contributors: What's Going to Replace the Dollar? and U.S. Debt Default, Dollar Collapse Altogether Likely.

High dividend stocks that are denominated in USD are liquid assets, i.e. a form of cash, and thus vulnerable to declining in value along with the dollar. Thus, we high yield stock investors have a problem.

Or do we?

Please note, I make no claim to be an expert in macroeconomics, monetary policy, banking, or whatever specific field claims relevant expertise about the future of the dollar. But here’s a basic summary of opinion.

1. The Case for the U.S. Dollar’s Demise

In essence, here’s why so many believe the U.S. Dollar (and dollar-based liquid assets like stocks and bonds) is in a long term decline.

It’s clear that the U.S. Government is planning to print a lot more dollars in order to revive its banking system and its economy. Basic economic theory says that when more dollars start chasing the same amount of goods, the dollars are worth less, as is everything priced in dollars, government and corporate bonds, U.S. manufactured goods and services, real estate, businesses, etc.

Unprecedented growth in money supply suggests unprecedented inflation is on the way, so liquid assets in U.S. dollars will be worth less. Like most world currencies, the USD is fiat money; it hasn’t represented a set amount of gold since Nixon ended the Gold Standard in the 1970s. It has no intrinsic value, only society’s confidence in it as a store of value. Once inflation becomes expected and confidence in the dollar wavers, restoring faith in the dollar and slowing inflation becomes increasingly hard.

FYI, many often go on to conclude the dollar will lose its status as the currency of last resort. The rest of the world will stop buying U.S. Government bonds, the U.S. goes bankrupt, world chaos, etc.

Conclusion, Disclosure & More Info

In this Part I, we’ve reviewed the state of the current market, its ramifications for U.S. dollar based high dividend stock investors, and a brief summary of the case against the U.S. Dollar.

In Part II we’ll:

• Review the case FOR the USD
• Criteria for high yield stocks that also provide a hedge against the U.S. Dollar
• Begin to look at some of the best stocks for combined high yield and USD hedge

Disclosure: I have positions in most of the above mentioned investments.

Go to page 2 >>>

Comments

[Dividend Gr...:]

Aren't you afraid that concentrating your portfolio mainly in high yielding sectors will hurt your portfolio in the long term? for exampl many investors seeking the highest yielding financials got burned when the dividends were cut. Isn't it better to obtain a balances approach between dividend growth and dividend yield?

Mar 03 08:40 AM

[GD:]

I've had many of the stocks mentioned over time. I sold in 10/08, and see an additional 30-50% loss since.
Even in the last 3-4 weeks the best Utilities are down 15-20%. Measly divs do help. I'm in bonds , cds, and cash

CLIFF, my advice to you is stick with accounting, your financial logic is wanting!

Mar 03 09:02 AM

[Malkiel:]

It's amusing to see how dangerous a little knowledge can be. Wachtel is a CPA, not to my knowledge an economist or political scientist, so the judgement about "The Ayatollahs ... (correctly) view[ing] Obama’s desire for “dialogue” as weakness," is typical right-wing hot air without any substance, and the usual stereotyped complaint "that the U.S. Government is planning to print a lot more dollars in order to revive its banking system and its economy" ignores the fact that the private banking system was "printing dollars" for decades with its synthetic promissory notes, and now that all those fake dollars have evaporated we are more likely to a have period of deflation as real assets are sold off at fire sale prices to pay off debts. Maybe the market can't bottom until all the Reagan babies on Wall Street have their dogmas burned away by the new economic reality and are ready to jump back into the market as it will be structured in the new American social democracy under construction...

Mar 03 12:03 PM

[Gregorian:]

It's abit off topic, but I just have to ask you about this.

"If Iran has a rocket powerful enough to heave a satellite into space, that same rocket can also toss a nuke into Europe"

Have you ever asked yourself WHY they would do this? I think you would end up with no plausible answer...

Europeans buy and consume Iranian oil every day. Would you toss a nuke at your largest export market? I wouldn't. Nobody would.

Mar 03 04:41 PM

[smsti:]

Did you ever lend money? Imagine you are a lender. If your debtor is not paying back, are you going to lend him again? And again, ... If your debtor seems to become insolvent, will you lend him even MORE? I don't think so. It is better to accept loss and call police then loose even more money. And it is US who is debtor in that story.

More important; it is about confidence: when one large lender is in tough doubt and rather decides to sell dollars, we can see race.

There are many competitive currencies and all are better than USD now. In Asia yuan is used for trading instead of dollar. Do you think it is because they believe in dollar? There is gold, silver, oil and other commodities. New currency is being used in persian gulf. There is also euro. And everything is better than USD backed by debt and FED printing presses.

Mar 03 06:22 PM

[Obamitall:]

Your assumption that all people are logical and rational and tolerant is a mistake. The Ayatollah and the zealots and mullahs think they are still fighting the Crusades and believe us to be "infidels", which in their thinking validates killing all nonbelievers. Hopefully you remember the 9/11 event.


On Mar 03 04:41 PM Gregorian wrote:

> It's abit off topic, but I just have to ask you about this.
>
> "If Iran has a rocket powerful enough to heave a satellite into space,
> that same rocket can also toss a nuke into Europe"
>
> Have you ever asked yourself WHY they would do this? I think you
> would end up with no plausible answer...
>
> Europeans buy and consume Iranian oil every day. Would you toss a
> nuke at your largest export market? I wouldn't. Nobody would.

Mar 04 06:49 AM

[hwood007:]

I see little here I would buy.

Mar 04 01:58 PM

[hwood007:]

read "America Alone" by Mark Steyn. while fiction, the story is full of facts that pertain to our current conflect.


On Mar 03 12:03 PM Malkiel wrote:

> It's amusing to see how dangerous a little knowledge can be. Wachtel
> is a CPA, not to my knowledge an economist or political scientist,
> so the judgement about "The Ayatollahs ... (correctly) view[ing]
> Obama’s desire for “dialogue” as weakness," is typical right-wing
> hot air without any substance, and the usual stereotyped complaint
> "that the U.S. Government is planning to print a lot more dollars
> in order to revive its banking system and its economy" ignores the
> fact that the private banking system was "printing dollars" for decades
> with its synthetic promissory notes, and now that all those fake
> dollars have evaporated we are more likely to a have period of deflation
> as real assets are sold off at fire sale prices to pay off debts.
> Maybe the market can't bottom until all the Reagan babies on Wall
> Street have their dogmas burned away by the new economic reality
> and are ready to jump back into the market as it will be structured
> in the new American social democracy under construction...

Mar 04 02:00 PM

[DuffBeer:]

Cliff,
Nice post !!!!
I too am building out my monthly divie portfolio and you post have been very helpful. This should be a part of Everyone's investment plan. I was so caught up in growth that I forgot income. You young guys out there believe you will find this out too . Put some dough in income stocks you will be glad you did.
Wow it amazes me how quickly the comments on the political front come.
Doesn't anybody like to be shot or rocketed at anymore ??? I think Iran should test out their new nuc in Tehran or Birjand that way they would know it works !!!! I will watch the test on Nasa channel can as I drink a
Shmatz's Jewbelation 12.
Cheers, DuffBeer

Mar 04 09:15 PM

[The Little ...:]

Your economic understanding is badly flawed. The government increases the money supply not by printing more currency but by creating more debt. Creating money does not cause inflation if people aren't going to spend it. The money supply is rapidly contracting and people aren't buying. We do not have have too much money chasing too few goods. We have too many goods chasing too little money.

Mar 04 11:28 PM

[Pink Panther:]

"HIGH YIELD STOCKS ARE A FORM OF CASH. THUS INFLATION EATS AWAY AT BOTH YIELD AND PRINCIPLE."

This is historically simply not true. While the price of stocks during the onset of an inflationary period collapse (therefore making this a bad time to sell), earnings (and dividends) per share stay roughly the same.
After inflation has gone, prices recover making an inflationary period a good time to buy! Plus you get paid a handsome dividend yield while-U-wait.

Little Professor:
you are talking present tense. In the future, as soon as credit recovers (and together with all the newly created money), we are going to have "too much money chasing too few goods" as the author suggests. So prepare yourself!

Mar 05 01:48 PM

[Chance Carson:]

Cliff, Nice series. Thank you. might check your use of "principle", however. Correct spelling is "principal" for Money matters. I always differentiate the uses of "principle" and "principal" by recalling that money is my "PAL," as was my high school "princiPAL". LOL! Best wishes.

Chance Carson, Editor, AboutETFs.com

Mar 05 08:07 PM

[SALTAWAY:]

How does saying that "everything is better than the USD" square with the recent rise in the dollar against the currancies you are alluding to? Yes. The Yuan is used but you may notice that it is pegged to the dollar and therefore can be used as a substitute for USD. The dollar is weak but ALL the other currencies are getting weaker faster right now (Euro, CAD, etc). We are the best of the worst so to speak.........that's the bottom line right now. PS Prepare for cheaper vacations in Europe and the UK in about a year!


On Mar 03 06:22 PM smsti wrote:

> Did you ever lend money? Imagine you are a lender. If your debtor
> is not paying back, are you going to lend him again? And again, ...
> If your debtor seems to become insolvent, will you lend him even
> MORE? I don't think so. It is better to accept loss and call police
> then loose even more money. And it is US who is debtor in that story.
>
>
> More important; it is about confidence: when one large lender is
> in tough doubt and rather decides to sell dollars, we can see race.
>
>
> There are many competitive currencies and all are better than USD
> now. In Asia yuan is used for trading instead of dollar. Do you think
> it is because they believe in dollar? There is gold, silver, oil
> and other commodities. New currency is being used in persian gulf.
> There is also euro. And everything is better than USD backed by debt
> and FED printing presses.

Mar 06 08:58 AM

[Cliff Wachtel:]

Hope you're O.K. with negative real returns on those investments. As long as one get's high dividend reliably and doesn't need to sell, I say take 4x the income and look at these like long term bonds with better appreciation chances. As I've repeatedly said, I'm a long term income investor, not a trader. My only problem is if the divy falters - a distinct possibility with some of my recs, especially in the energy sector. Price and yield seem to justify the risk. "Measily" dividends? Are we looking at the same stocks?


On Mar 03 09:02 AM GD wrote:

> I've had many of the stocks mentioned over time. I sold in 10/08,
> and see an additional 30-50% loss since.
> Even in the last 3-4 weeks the best Utilities are down 15-20%. Measly
> divs do help. I'm in bonds , cds, and cash
>
> CLIFF, my advice to you is stick with accounting, your financial
> logic is wanting!

Mar 08 03:49 PM

[Cliff Wachtel:]

Legitimate point. Its not the sectors, but the individual stocks that I believe are likely to sustain and grow their dividends. I can't make claims for every stock in a given sector. Some clearly ARE at risk of divy cuts, like energy and shipping. I suggest the rewards justify the risks, though I've repeated that anyone going long now use only funds not needed for the next year or so, since the trend is still down. You balance that risk of near term loss against the chance of a bounce and certainty of earning far better than in cash or near equivalents.


On Mar 03 08:40 AM Dividend Growth Investor wrote:

> Aren't you afraid that concentrating your portfolio mainly in high
> yielding sectors will hurt your portfolio in the long term? for exampl
> many investors seeking the highest yielding financials got burned
> when the dividends were cut. Isn't it better to obtain a balances
> approach between dividend growth and dividend yield?

Mar 08 03:54 PM

[Cliff Wachtel:]

Thanks! I heard the same rule, and specifically believed that spelling did NOT apply. Will check, always appreciate a legit correction.


On Mar 05 08:07 PM Chance Carson wrote:

> Cliff, Nice series. Thank you. might check your use of "principle",
> however. Correct spelling is "principal" for Money matters. I always
> differentiate the uses of "principle" and "principal" by recalling
> that money is my "PAL," as was my high school "princiPAL". LOL! Best
> wishes.
>
> Chance Carson, Editor, aboutetfs.com/

Mar 08 03:57 PM

[Cliff Wachtel:]

Thanks for the comment, dead on, as usual.


On Mar 04 09:15 PM DuffBeer wrote:

> Cliff,
> Nice post !!!!
> I too am building out my monthly divie portfolio and you post have
> been very helpful. This should be a part of Everyone's investment
> plan. I was so caught up in growth that I forgot income. You young
> guys out there believe you will find this out too . Put some dough
> in income stocks you will be glad you did.
> Wow it amazes me how quickly the comments on the political front
> come.
> Doesn't anybody like to be shot or rocketed at anymore ??? I think
> Iran should test out their new nuc in Tehran or Birjand that way
> they would know it works !!!! I will watch the test on Nasa channel
> can as I drink a
> Shmatz's Jewbelation 12.
> Cheers, DuffBeer

Mar 08 03:59 PM

[User 321850:]

I don't get it, he says stocks are going lower, but we should hedge buy buying short etfs at prices 1/2 of what they are now. For those shorts to get anywhere near those prices, we'd need the dow back at 9,000. Can anyone explain this?

Mar 09 11:08 AM

[Cliff Wachtel:]

Well, I'll try. First I DON'T know that stocks are going lower, merely that the balance of evidence suggests that they will. Since the Ultrashorts move at 2x the market rate, they can indeed get down fast if the market makes a sudden move up, which it can easily do given its technically very oversold condition.

Markets don't go straight down or up, they oscillate around a rising, falling, or flat mean (like a 200 day moving average). Thus within a downtrend you DO get rallies within the overall downtrend - i.e. a series of lower highs and lower lows than the previous up-down oscillation.

I set buy levels for the ultras at strong support because I and most of my readers are not traders but income investors, who generally don't try to time markets. Thus if we buy something that isn't paying us a large dividend for a long term hold, we only buy at strong support so that if that support fails we can get out before the loss gets large.

Hope that clarified things. Please feel free to ask follow up questions.

Mar 10 04:07 PM

[smokey0110:]

I thoroughly enjoyed your article! Kudos to you! One thing I might add is that this is the time you should be using the principle of dollar cost averaging. I do believe that the price of crude and natural gas are going higher. With higher cost producing sites being shut down and exploration being curtailed, our surplus will quickly start to dwindle down and the prices will rise. Simple economics 101. Also, new production that was supposed to come online in 2009 and 2010 has been pushed back to cut down on expenses. All of these factors will result in higher prices in the near future. Do people think that the cost of a barrel of oil has risen to over $50 for no reason at all? Any way, great article and great recommendations. We will be laughing all the way to the bank in a couple of years.

Mar 26 09:27 PM

[agg72:]

Some good points but I would be very leery of Canadian Royalty Trusts. True, they pay monthly and(currently) are only taxed @ 15% but the reality of their earnings many times don't square with the press releases from their investor relations depts. And lately their high yielding dividends have proved ephemeral with several that I own getting sucker punched with cuts soon after mgmt. gave guidance that current payouts should continue. Maybe that's why most of them ate down 70% or more from a year ago.

Apr 11 09:50 AM

[outfornow:]

I too invested in Canadian Trusts. However I would not have done as well as I did without Roger Conrad's Canadian Edge newsletter. Most commentators do not have the time to understand the Canadian investing and political environment and to investigate the different trusts to weed out the PR from the True Story. He is not perfect however he admits his mistakes and is straightforward about his own assumptions. So it is possible to make good use of his information but ignore some particular advice.
His newsletter is a valueable resource complete with an RSS(?) price feed in US dollars and links to interactive charts etc. as well as the usual buy/sell/hold advice, watchlists and various rankings.
.

On Apr 11 09:50 AM bonddaddy wrote:

> Some good points but I would be very leery of Canadian Royalty Trusts.
> True, they pay monthly and(currently) are only taxed @ 15% but the
> reality of their earnings many times don't square with the press
> releases from their investor relations depts. And lately their high
> yielding dividends have proved ephemeral with several that I own
> getting sucker punched with cuts soon after mgmt. gave guidance that
> current payouts should continue. Maybe that's why most of them ate
> down 70% or more from a year ago.

Apr 11 04:25 PM