Russell Upsomgrubb

Jim Cramer's Mad Money In-Depth, 3/5/08: Killinger Makes a Killing

Only Canadian energy trusts can continue to add assets and their distributions are considered qualified dividends rather than royalties and are taxed at a different rate. From Investorguide.com:

U.S or Canadian
There are a few key differences between Canadian energy trusts and U.S. royalty trusts. U.S.-based royalty trusts (which are legally precluded from making acquisitions financed by new debt and/or equity and, therefore, cannot as readily replace depleted reserves) are essentially blow-down investment vehicles. Canadian energy trusts are very different. In fact, Canadian energy trusts have managed, during certain extended periods, to actually increase per trust unit production, discounted cash flow value and distributions, in addition to maintaining reasonable monthly or quarterly distributions on the trust units. The ability to acquire assets and finance them with new equity, combined with a tax-efficient structure, leads to a financial vehicle that is radically different from its U.S. counterpart.