Feature Article

Pumping Profits

High Yield Of The Month

High Yield of the Month

Portfolio

The Numbers: Good and Bad

Tips On Trusts

Tips on Trusts

Canadian Currents

Make the Wireless Revolution

In Brief

Think Yields First

Canadian Edge is first and foremost a yield-focused advisory. Cash dividends are, of course, the surest way to build wealth. But there’s a lot more to it than that.

For one thing, a rising stream of distributions will push a trust’s or corporation’s share price steadily higher over time. That’s been the formula for all successful Portfolio recommendations since CE was founded four years ago.

More important in this fear-drenched market, secure distributions are the best possible assurances we have that damage suffered by our favorites now will prove temporary. And the cash we receive each month is a very strong incentive for holding on.

Of course, all that goes out the window when a trust or corporation is forced to cut its distribution. That’s the stuff that turns a retreat into a rout. And the hole blown into your portfolio isn’t easily repaired when overall market conditions inevitably turn up again.

Gauging dividend safety is consequently critical, and there’s no time to gauge it like earnings season. Several trusts and corporations tracked in the How They Rate Table have already reported their numbers. CE’s top picks’ results are reviewed in the Portfolio section, and others are noted in the How They Rate Table. With very few exceptions, most of the rest will release their numbers by the end of next week, and we’ll be updating you via flash alerts and the How They Rate Table as they appear.

The good news is, from what we’ve seen so far, the best trusts are still holding up well against the triple challenge of a weakening North American economy, rising raw materials costs and still-tight credit market conditions. That’s very welcome news indeed because it means their distributions are safe for at least another quarter.

The bad news is investment markets are now squarely focused on what could go wrong in the second half of 2008 and early 2009. The massive selloff in energy-related trusts and corporations in recent weeks is entirely driven by worries about a US economic contagion sweeping into Asia and slashing demand for energy and other raw materials. Those fears are also having an impact on the Canadian loonie’s exchange value, which has dropped several percentage points against the US dollar in just a few weeks.