Buy into the oil dip with high-yield trusts – MoneyWeek

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Thetrustsdonotdevelopenergyreservesthemselves,butconcentrateonmanagingandgeneratingcashflowfromprojects。

Whenanoilreservedriesup,thetrustgenerallyraisesmoneytopurchasenewpropertiesthroughpublicshareofferings。

OneofthemostattractivefeaturesofCanRoysistheirhighyields。

Growingpopularityamonginvestorshasseenthesedeclineoverthelasttwoyears,butyieldsstillaverage10%acrossthesectorandmorethan100increasedpayoutsinthelastyear,accordingtoRoyalBankofCanada。

Theaveragedividendpayoutofthe73trustslistedonCanadianandUSmarketsismorethandoubletheyieldonCanada’sten-yeargovernmentbond,andalmostfourtimeshigherthantheaveragedividendyieldofstocksontheTorontoStockExchange。

Capitalgrowthhasbeenstrongtoo。

CanadianOilSandsTrust,whichinvestsintheAthabascatarsands,isup11%ontheyear。

ThemainrisktoCanRoysis,ofcourse,fallingoilprices,whichhitboththesharepriceandthedividendspaidbythetrusts。

Butifyoubelieveinthelong-termoilbull,CanRoysshouldproveagoodinvestmentforsometimetocome。

RichardLehmannofForbesrecommendsCaneticResourcesandHarvestEnergyTrust,whichbothyield16%,while“investorsseekingagrowthplay”shouldlookatEnerplusResources。

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