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Gold/Mining/Energy : Canadian REITS, Trusts & Dividend Stocks

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To: Scott Mc who wrote (3751)	7/25/2002 7:00:13 PM
From: Ron Everest	Read Replies (1) of 11633

Thanks Scott, My view of leveraging is a very conservative one. Only approx 10% of one's holdings in this case. If the market starts to turn then sell off one of your weak holdings and solve the problem. Another way to play this is to buy at weakness just before the ex div date, look for trusts that have a relatively stable albeit conservative yield, there are those that do not drop much at ex div and recover quickly. IF the opportunity presents itself, short term trade the trust for a capital gain and small div yield. I had mortgages and rental properties in the past and found that the yields after taxes were poor and in the case of rentals, there is a very high risk of tenant problems. The real catch is if one encounters a real sob of a renter that cannot be removed, has no assets and does a number on the property. The same can apply to a mortgage situation, albeit, there is usually enough equity to cover off the default. A REIT that I am interested in is RRR.UN. While the yield is only approx 9%, it has some interesting qualities that make it attractive: a) It also is taxes at a very low rate not dissimilar to EIT.UN b) It is more of a hybred REIT in that it is not subject to the vagaries of the realestate rentals market. RRR is very attractive to those that want to buy and put the investment on the shelf and continue collecting the payments. There is a potentially major negative to all of the trusts in that by their nature they take on some bond investing characterists. As for the capital gain characteristics, I am pretty sure that they will gain inversly to interest rates. The current outlook may have a time when interest rates are stable 2 - 3 years?? or less?? When one is looking for fixed income this may not matter a whole lot if the income stream is stable. Lets face it, trusts are a whole lot better than a GIC which is taxed fully. Many quality trusts have a good opportinity to realize 9 to 12% yields. Depletion factors must be seriously considered in buying any Trust. IMO, it is better to have a trust that can withstand the long haul and to do this must not pay out all of their cash. I am on the search for these safe Trusts now and would venture to say that relying on fixed income would say the same thing. Best regards, Ron

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