Canadian Corporations, 4Q 2011 Update: A Bonanza Of New Issues

by: Five Plus Investor

I apologize for being about a month late on the regular quarterly update on Canadian Corporations and Trusts.

I was researching pink sheets stocks for another article, with no real intention of finding Canadians, but lo and behold, they found me! I discovered 27 new issue and undiscovered Canadian Corporations and Trusts yielding 5% or more to add to the FPI-Rated CanCorp spreadsheet. These discoveries have ballooned our count of Canadian issues by almost 25%, from 91 to 118 total choices.

With so many new choices to comb through, I am foregoing the normal review process for existing CanCorps and will focus only on describing and rating new issues. This may mean that changes to existing issues are not recorded on the spreadsheet, i.e. yield and any changes to distribution policy.

To access the FPI-Rated CanCorps google spreadsheet, click here.

For a review of the FPI (Five Plus Investor) rating system, please see my 3Q update.

The rating system summarized:

Ratings 1 - 3: "Investment Grade"
Rating 4: Invest with Caution
Rating 5: Avoid

Added for 4Q 2011 Update:

FPI Rating #1

  • Calian Technologies, Ltd. (OTC:CLNFF) - Calian sells technology services (radio frequency systems and satellite test systems) to businesses and the government in Canada and worldwide. In spite of having an earnings and EPS decline in 2010, Calian continued distribution increases, with an increase every year except 2006. This exceptional performer is FPI-ranked #1.
  • Faircourt Gold Income Corporation (OTC:FRCGF) - closed-end fund managed by Faircourt Asset Management which invests in gold equities, specifically gold producers as listed on the S&P/TSX Global Gold Index. The fund employs an option-writing strategy to increase income. This monthly payer increased its dividend in 2011, and the share has appreciated nicely since inception. One of the few ways out there to play gold with income. Started at #1 rating.

FPI Rating #2

  • Amica Mature Lifestyles, Inc. (OTC:ACCKF) - Senior housing community developer with properties primarily located in Ontario, but also British Columbia and Alberta. This company did not decrease dividend during financial crisis; kept the distribution flat for 3 years, then raised the distribution in years 2011 and 2012. This issue is started at a #2 Rating.
  • AGF Management, Ltd. (OTC:AGFMF) - Investment funds and advisors with $46 Billion (C$) under management. This issue decreased dividend slightly in 2009 but has since increased and superseded its previous dividend rate. Started at a #2 rating.
  • CANMARC Real Estate Investment Trust (OTC:CANNF) - CANMARC is a REIT owning 116 income-producing properties, primarily commercial, in the retail and office sectors. This is a relatively new REIT, in existence since 2010, and is stable payer. This REIT's growth strategy portends favorably for distribution growth, so CANMARC is started at a #2 rating.
  • Eagle Energy Trust (ENYTF.PK) - Oil and natural gas trust, acquiring long-life hydrocarbon reserve on-shore in the United States. This issue has received much positive press for its acquisition strategy, no-debt status and unique tax structure. Distributions have been stable since introduction. Started at #2 rating; could be a #1 rating if distributions increase.
  • Genworth MI Canada (OTC:GMICF) - Genworth is the leading private sector supplier of mortgage default insurance in Canada. This issue has not paid dividends long (just over 2 years) but has increasing payout every year. Because of recent concerns regarding profitability the issue is started at a #2 rating, although the dividend history so far is top-notch.
  • TransGlobe Apartment Realty (OTC:TNGBF) - this open-ended trust owns a growing portfolio of high quality apartments and high-end town homes. This is a monthly payer with a short dividend history, but a strong growth strategy. The stock has also appreciated nicely since inception in July 2011. Started at a #2 rating.

FPI Rating #3

  • Aastra Technologies, Ltd. (OTC:AATSF) - Aastra is a worldwide communications company with a presence in over 100 countries. They offer communication platforms, applications, and end products such as mobile and desk phones. It recently introduced a dividend, which has increased, but there is not much dividend history to track. The price has also faltered in 2011. It is started at a #3 rating.
  • Blue Ribbon Income Fund (OTC:BLUBF) - Actively managed by Bloom Investment Council of Brompton Group, this is a diversified fund holding income-producing trusts, equities and preferred shares. Four-year history, raised distributions once for 2010, then back down to same rate as 2009 for last two years. However, the fund has appreciated nicely during this time, so it is started at a #3 rating.
  • Boston Pizza Royalties Income Fund (OTC:BPZZF) - The website for Boston Pizza, a franchise-driven restaurant chain, proudly proclaims that it is "Canada's #1 Casual Dining Brand." The fund reduced distributions in 2010 temporarily, then increased, but not back to the previous level. However, this company has solid earnings growth and the stock has recovered nicely since 2009, so it is started at a #3 rating.
  • Dundee Real Estate Investment Trust (OTC:DRETF) - Dundee is an open-ended REIT investing in office and industrial sectors, with a focus on high quality, well-located properties. This issue has maintained a stable, bond-like distribution at $0.183 monthly per share since 2003. This is a long time to not raise a dividend. It is started at a #3 rating.
  • GMP Capital, Inc. (OTCPK:GMPXF) - GMP Capital provides investment services to corporate, institutional and high net-worth individuals. The price variance on this share is wide, from $25.00 to just over $3.00 from 2007 - 2008, and in 2011 alone the price dropped 50%. GMP cut the dividend 3x in 2008, but since 2010 has offered consistent dividend increases. Because of volatility, this one must be started at no better than a #3 rating.
  • Keg Royalties Income Fund (OTC:KRIUF) - Where's the frat party? Just kidding. The appropriate response to this one is not "rock on, dude", but "waiter, check please." This issue is the income fund for Keg Steakhouse & Bar, a restaurant chain with over 100 locations across North America. Distributions were cut in 2011 and were not raised for 2012, so this is started at a #3 rating.
  • Power Financial Corporation (OTCPK:POFNF) - Diversified investment and management company focusing on the financial sector in Canada. The company also has European interests, which may account for the stock price drop in 2011. Power Financial did not cut its distribution during the financial crisis; however, neither has it raised it. Although this company has a positive balance sheet, it is started at a #3 rating because of static dividends and lack of dividend announcement for 2012.
  • Westernone Equity Income Fund (OTC:WEQIF) - WesternOne Equity acquires and grows construction and infrastructure companies located in Western Canada. In spite of a downturn in construction across North America, this one has delivered a bond-like, stable distribution of 5 cents p.s. since mid-2007. This one could deliver an increase when construction picks up; but for now it is started at a #3 rating.

FPI Rating #4

  • Active Energy Income Fund (OTC:ATVYF) - Closed-end end fund managed by Middlefield Capital Corporation that invests in dividend-paying oil and gas companies and trades on the Toronto exchange. Decreased distributions in 2009 and 2011. Started at a #4 rating.
  • Big Rock Brewery, Inc. (OTCPK:BRBMF) - A Canadian is always nicer with a beer…This brewery was founded in 1985 and produces premium, all-natural craft beers. It would be nice if they were as profitable as they were tasty. Net losses have forced the distribution and stock price down in 2011. Started at a #4 rating.
  • Carfinco Income Fund (OTC:CFIOF) - Carfinco provides auto financing to consumers who can't get loans through "traditional lending sources." Loan shark anyone? The payout is erratic and the distribution was drastically cut in 2010, yet the issue still managed to appreciate 1100% since the financial crisis. If you are looking for a stable payment rather than speculative capital growth, this one is not for you. Started at a #4 rating.
  • COMPASS Income Fund (OTC:CSSDF) - Closed-end investment trust managed by Middlefield Capital Corporation. Reduced distributions in 2009 and 2011, started at a #4 rating.
  • Canexus Income Fund (OTCPK:CXUSF) - Canexus is a chemical manufacturing company producing sodium chlorate and chlor-alkali products for pulp and paper and water treatment industries. With their recent conversion to corporate status in July 2011, the company now pays a quarterly - and reduced - dividend. Stock price is volatile. Started at a #4 rating.
  • DDJ High Yield Fund (OTC:DDJHF) - Closed-end fund managed by CI Investments that invests in high-yield debt securities. Distributions took a nose dive during financial crisis and have not recovered. Started at a #4 rating.
  • Genivar, Inc. (OTC:GNVUF) - Genivar is a diversified professional services firm offering a broad range of services, from telecommunications to infrastructure to energy, promising a "truly coordinated approach". Like most CanCorps switching to quarterly from monthly payments, Genivar celebrated by reducing cumulative yearly dividends by about 25%. Tanking of stock price followed. Started at #4 rating.
  • Pizza Pizza Royalties Income Fund (OTC:PZRIF) - This is an open-ended trust that acquires trademarks licensed to Pizza Pizza for which the fund pays 6% of the system sales of the Pizza Pizza brand, and 9% for the Pizza 73 brand. Like many trusts they reduced distributions for 2011. The variable rate of ROC from year to year may make the taxes on this one problematic. Started at a #4 rating.
  • IndexPlus Income Fund (OTC:IDXPF) - Another fund actively managed by Middlefield Group, seeks to "enhance returns and reduce the risks associated with indexing."…whatever that means. Like all other Middlefield funds, it has reduced distributions twice in the last five years. Started at #4 rating.
  • Richards Packaging Income Fund (OTC:RPKIF) - Glass and plastic container manufacturer since 1912. Richards temporarily suspended distributions in 2009. Unfortunately, their investor relations website is laden with spam and text link ads. Click the link to distribution info, you get a security warning. For the dividend cut and spammy website they get a #4 rating from me.
  • Reitmans (Canada) Ltd. (OTCPK:RTMAF) - Reitman's is Canada's largest womens' specialty retailer with 925 stores across Canada, operating under several brand names. Sales are down, and the company announced in October 2011 the closing of 25 "Cassis" brand-name stores. The stock price has also oozed downward. Started at a #4 rating.
  • Sciti Trust (OTC:SIIYF) - Sciti Trust, managed by Scotiabank, invests in a portfolio of the 50 highest yielding equity securities included in the Scotia Capital High Yielding Equity Index. Distributions have steadily decreased throughout 2011 and the trend continues in 2012. Started at a #4 rating.
  • FPI Rating #5

    No new issues are given the #5 rating.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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