Finance Blog

Continuing on S&P TSX Utilities Index contains both Income Funds and various utilities companies

Contrary to the broad market, it seems like utilities have had a pull-back so far this year. It may be a good opportunity to get in on some high-yielding funds for the income/cashflow.

Just a follow-up to my previous post, here’s how REIT’s have faired over the past years

Is the Canadian Market way to hot right now? Let’s take a look…

I did a little number crunching, for the growth rates of the S&P/TSX Composite Index for the last few years. Here are the numbers:

Notice the double-digit percentage growth for 2003, 2004, 2005. That’s three straight years! And from the very bottom in Oct 2002, the gain is over a whopping 100%, that’s double! So, are we done? Year-to-date shows that it’s cooled off a bit. However, it’s still a 12% growth since same time last year. Now for the chart…

Wow, quite a bull-run. A small drop since beginning of the year, but looks like it’s headed up again?

Now, how about those gems of the Canadian market, the income trusts. Let’s look at the S&P/TSX Income Trust Index…
Similar story, and chart…

Here’s a great article on the income trust outlook — Rethinking Income Trusts. I think he’s got a very good point…

So at this point, my advice is to income trust investors is to lower their sights. If you are sitting on large capital gains, consider taking some of the money off the table. Make future purchase decisions on the basis of yield and cash flow sustainability. Avoid speculation.

In short, choose trusts on the basis of what they are supposed to be: income securities, nothing more, nothing less.