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Canadian Oil Sands Trust (COSWF.PK -10.6%) falls after announcing a probable dividend cut of...

Canadian Oil Sands Trust (COSWF.PK -10.6%) falls after announcing a probable dividend cut of 60%. A cut was expected due to expiring royalty trust tax benefits, but higher equipment costs necessitated a larger than anticipated reduction.
Comments (2)
  • This makes a logical entry point. The fact still remains that players in this sector are sitting on billions of barrels of oil. One can denigrate this "dirty" oil all they like! A further fact still remains, as the oil 'crunch' becomes acute and people start freezing in the dark, it won't matter where the oil comes from - they will want it - and want IT NOW!
    3 Dec 2010, 02:17 PM Reply Like
  • Strictly speaking, it is not the dividend that is being cut. Currently, COS makes monthly interest payments to unit holders. On conversion to a corporation as a result of changes in Canadian corporate tax law that take effective January 1, 2011, it will make quarterly dividend payments but these will be at a lower annual rate than was the case for the former interest payments. For Canadian resident taxpayers the change of the income steam from interest to dividend has tax advantages that partially offset the reduction in the after tax income from a converting income trust. Non Canadian residents will be governed in this regard by the tax laws of their home jurisdiction and by whatever tax treaty Canada and that jurisdiction have.
    3 Dec 2010, 02:24 PM Reply Like
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