Five Canadian Royalty Trusts Offer High Yields

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Canadian Royalty Trusts pay out a high portion of their profits to shareholders as dividends. Out of the many royalty trusts that trade in the US markets, five are listed below with their current dividend yields:

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Though the Baytex Energy Trust currently offers a lower yield than others the yield is set to increase. From a news release yesterday: “Baytex is also pleased to announce that our Board of Directors has approved a distribution level of $0.18 per unit per month, an increase of 50% from the current level of $0.12 per unit per month. The $0.18 per unit distribution will commence with the distribution in respect of December 2009 operations, which will be payable on January 14, 2010 to unitholders of record on December 31, 2009.”

Unlike American royalty trusts Canadian trusts can acquire additional properties when the inital ones run out of oil or gas or other natural resources they extract. Canadian trusts also do not pay corporate taxes as long as they pay out a high proportion of profits as dividends to trust unit holders. It must be noted however that this special tax treatment of trusts is set to end in 2011. The Canadian government will then start taxing them as regular corporations and remove the special tax advantages they enjoy now. As a result of this tax treatment change these trusts will not be able to offer such high yields in the future.

Latin American Bank ADRs Show Strong Performance YTD

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Emerging market banks were not affected much if anything at all in last year’s global meltdown. While most banks in the developed world or the “core” played with exotic derivatives
and offered reckless loans to almost anyone with a heartbeat, emerging market banks stayed prudent and followed stable growth strategies. Hence almost all of the banks in developing countries such as Brazil, China, India, Malaysia, Chile, Colombia, etc. remained stable during last year and revived their growth this year.

Some of the others reasons for the strength of banks in the developing world include:

1. Existence of both public and private sector banks
2. Strict banking regulations
3. High deposit to loan ratios
4. Strong capital adequacy ratios
5. Negligible involvement in subprime loans and derivatives

Many of the reasons mentioned above have helped Latin American bank stocks gain upward momentum year-to-date as noted below:

1. Banco Macro (BMA)
YTD Change: 173%

2. Grupo Financiero Galicia (GGAL)
YTD Change: 138%

3. bacno Bradesco (BBD)
YTD Change: 121%

4. Itau Unibanco (ITUB)
YTD Change: 121%

5. BBVA Banco Frances (BFR)
YTD Change: 111%

6. Bancolombia (CIB)
YTD Change: 87%

7. Corpbanca (BCA)
YTD Change:87%

8. Banco Santander Chile (SAN)
YTD Change:76%

9. Banco De Chile (BCH)
YTD Change: 62%

The growth of these bank stocks also show domestic and foreign investors’ confidence in growth of this sector. With strong balance sheets and sound policies, Latin American banks are in a good shape to expand further next year and beyond.

Five Foreign Stocks Yielding More than 6%

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Foreign stocks usually pay higher dividends. Five of the foreign ADRs that pay more than 6% dividends as of market close on November 20th are listed below:

1. Company: Torm A/S (TRMD)
Sector: Shipping
Country: Denmark
Current Dividend Yield: 13.38%

Please Note: I made a typo on the ticker for Torm A/S. The correct ticker is TRMD and not TORM as stated earlier.

2. Company: Administradora de Fondos de Pensiones Provida SA (PVD)
Sector: Investment Services
Country: Chile
Current Dividend Yield: 8.31%

3. Company: Magyar Telekom Nyrt (MTA)
Sector: Telecom
Country: Hungary
Current Dividend Yield: 8.89%

4. Company: Hellenic Telecommunication Organisation SA (OTE)
Sector: Telecom
Country: Greece
Current Dividend Yield: 6.38%

5. Company: Telecom New Zealand (NZTCY)
Sector: Telecom
Country: New Zealand
Current Dividend Yield: 9.90%

It must be noted however that tax treatments of foreign company dividends may vary depending on the reciprocal tax treaties with the U.S.

Denmark-based TORM was hit pretty hard during the credit crunch last year when global trade collapsed.However in the long-term value and pays consistently high dividends.The traditional telecom companies listed above also have high yields with Telecom New Zealand offering nearly 10%.