smurphny

Ten Top Value Traps with Unreasonably High Dividends

Selling got overdone on many of the oil/gas trusts. At current prices, even with expectation that distribution will fluctuate, these represent good values. Crude is also nearer bottom than top. Crude at 10=depression and even cash will not be safe unless it's in gold under your bed. Barring this nightmare scenario , it's probably time to start adding these before they DO get to a point of higher risk. The "trap" may be in waiting until too late because when the general market turns up, which will precede the recovery, the value of these will soar.

Citigroup Forecasts High Distribution Cuts By Canadian Royalty Trusts

The real issue with the CANROYs and Amer. oil trusts is the price of oil and the potential decreases in share price. Dividends are a side story. The bear market in crude is not close to being over yet. Irrationality may bring oil down to $20/brl, as far on the downside as it went on the upside. That will be the time to get back into these trusts. If oil plummets further, Canroys may all trade in the single digits for some time. Remember, with the concept of "cheap" : from $5 to $2.50 is a 50% loss. Hold for now because there will be a tremendous opportunity later. I think there WILL be clear signs that the bottom in crude has been reached. Look for news hints that supply is dwindling, refining capacity has been hurt by abandoning new projects (HTE), or reserves are leveling off. If OPEC suddenly comes up with a way for members to comply with reasonable quotas would be another signal. As with any investment, confidence is needed. Right now there is none and no clarity. The oil-driven economy of the world is not going away any time soon but for now, the bear is alive and well.

Canadian Royalty Trusts Will Never Return to Their Former Glory

One thing that needs to be mentioned is the future of the dollar/loonie ratio. When the billions of fresh new US dollars start to chase a dwindling supply of oil (and other commodities), the value of oil in US dollars will likely skyrocket. The impending inflation debacle should make owning oil in the ground a safe place even with reduced distributions. These companies are just that : companies with loyal employees and management who want to maintain their businesses, unlike their US counterparts which are entirely different paper entities with no real corporate identity or spirit. I am looking forward to them converting to corp. status. ** The coming US search for tax dollars from "the wealthy," (right!) by a populist, liberal Congress DOES worry me.**