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Gold/Mining/Energy : Canadian REITS, Trusts & Dividend Stocks
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To: David Alon who wrote (3740)7/25/2002 4:01:25 PM
From: Ron Everest  Read Replies (4) of 11633
 
David and Scott,

There is a good case to make for limited leveraging, particularly why one is buying a stable trust like eit.un.

Yield @ cost eit.un @ $7.00 = 12%
Cost of borrowing TDW or less = 5.25% approx

Approx gross yield = 7%

I believe there is a further benefit increasing one's net yield in that only 32% of the 12% is taxable and all of the borrowing costs are deductible.

There are, of course, interest rate risks on the borrowing side and credit risk and yield risk on the yield side that must be factored into this scenario. The risk of much higher interest rates is currently muted, and the basket of trusts should hold the yield somewhat constant, jmo.

Comments?

p.s. Peter and Lorne...the bickering is counter productive.
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