Wednesday, October 10, 2007

Canadian Energy Trusts

Kiplinger ran an interesting article a week ago regarding Soaring Oil Trust Yields. Over 15% of my portfolio is in Harvest Energy Trust, who put out this latest press release. So, my dividends coming on October and November 15th are set in stone, but this is the first time in quite some time that HTE did not announce a quarters worth of dividends at one time.

I have known that I would possibly need to exit these positions some time in 2010, due to the Tax Fairness Plan, but the recent news of the Alberta tax increase from 25% to 30% has made me take pause. While I am not ready to abandon the consistent income and growth that I have achieved since my purchase of HTE, it has definitely led me to rethink my sell point.

Up until recently, last month, I was not reinvesting my dividends back into HTE. Best case scenario as I see it, the tax increase in Alberta of 5% translates to a dividend decrease of 5% to unit holders of HTE. Using that best case scenario, and my cost basis for the units that I currently hold, selling the units for $30.00 per share would net me the same amount as collecting dividends for the next 2 years. If I can squeeze $34.00 a share, that would be the same as collecting those dividends over a period of 3 years (putting us right before the January 1, 2010 Tax Fairness Plan kickoff).

HTE is on an upward swing. It has a 52 week high of 33.97. If it continues it's upward trend, I will sell at the best point I can find in that 30-34 dollar range.

Always perform your own due diligence before making any investment.

No comments: