Life isn’t perfect and for whatever reason we purchase stocks we shouldn’t have bought, lured in by the high yield, or still hang on to stocks we should have sold. Investor confidence in a company can be sudden and swift. In the case of TransAlta Corp (TA) for example (which I don’t own) this was pointed out in a recent post by John Heinzl. Management decisions over the sale of the  Sundance coal plants, and the looming threat of a dividend cut, have pummelled the stock price. TA closed at $16.81 per share today, down -20.5% from a recent high of $21.15 per share on February 26th. Back in October, TransAlta was trading over $23 per share. As well as the dividend yield now close to 7%, investors have also been concerned with TransAlta’s high dividend payout ratio at 89.2%, which is high even for a utility – it used to be over 100%! Pengrowth Energy (PGF), a smaller oil and gas producer with a crashing share price (one of my smaller holdings), has left the dividend yield ...

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This article was published in the September 2011 edition of the Canadian MoneySaver, and is posted here with permission. For more information visit www.canadianmoneysaver.ca Part -1 …to be continued in November 2011 January 1st 2011, was the deadline for Canadian income trusts (other than REITs – Real Estate Investment Trusts) to convert to corporations.  In this two-part series, I examine the basic changes of income trusts into corporations, and what’s happened to these high-yield dividend payers. Now that almost all income trusts have converted to corporations, which ones are still worth holding? The Cash Cow In Canada, income trusts were created as an alternative to the corporate structure.  The first income trust was Enerplus Resources, established in December 1985. Income trusts were created to avoid taxation, by paying out all their earnings (dividends) directly to shareholders. This meant that investors would get a higher yield, in exchange for paying all the tax ...

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This article was published in the July/August 2011 edition of the Canadian MoneySaver, and is posted here with permission. For more information visit www.canadianmoneysaver.ca Many dividend investors go to great lengths to screen dividend stocks. If you stick with the big dividend aristocrats or other big blue chips, you will do just fine. Some of these companies have been paying dividends for over 50 to 100 years! The economic stability of a company like that, which also increases its dividends year after year, is money in the bank. This is what most dividend investors look for, and it is the basis of Dividend Growth Investing. However, many good dividend paying stocks are not big blue chips with a significant dividend history, but may present good investment opportunity. They are usually higher yield stocks with smaller capitalization, but companies with a solid business plan, good management, and several years of operating revenue. The question is whether that company is a sound investment, ...

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Last week COS.UN (Canadian Oil Sands Trust) announced as it was converting to a corporation, and it would be cutting its dividend some 60%. This essentially reduced its effective dividend yield to 3%. As a result, the share price of COS has plunged some 15% as investors dumped their shares.  Is COS the new future and landscape of Income Trusts, which convert to corporations? For investors who love high dividend yields, Income Trusts have been a gigantic cash-cow. Generating staggering yields of 7% to 13%, with a hefty return on share price, these Income Trusts have paid dividend investors more than handsomely. But are the good times over? Are Income Trusts another bubble waiting to pop? Everyone is aware of the looming January 1st, 2011 deadline when Income Trusts must convert to corporations, excluding REITs which are exempt. But some Trusts haven’t converted, some have kept their unsustainable high yields, and yet others are going to experience what COS experienced last week – ...

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