Income Production

Here is a list of solid income-producing trusts with which I have experience, that have monthly distributions far greater than any interest-paying bank that I know of and are easily acquirable. For Canadians at least, these can all be purchased through your broker. The distributions have been reliable over the period that I have followed them at least (i.e., distributions every month or every quarter).

All of these can be traded on the Toronto Stock Exchange (TSE). For discussion or updates not shown here, check my blog.

Note that the yields shown below are the effective base yields (i.e., neglecting special distributions during the year) and are attainable if one were to acquire units at the prices shown below. No assumptions, considerations or adjustments have been made regarding present or future income tax, although this may be included in future updates to this page. These distributions are raw present income distributed to the investor who, in a worst-case scenario, would pay tax as though the income were pure interest.

2006-Sep-30: added Shiningbank Energy Income Fund (SHN.UN) to this list.

2006-Oct-31: Halloween Treat - Canada's Finance Minister sliced a large portion (C$30+ billion) from the value of the income trust holdings in investors' portfolios by changing the tax rules. As of 2006-Dec-15, with no further clarification as yet from the minister, no reductions in distributions have been announced for the trusts shown here.

2007-Jul-11: Shining Bank Energy Income Fund merged with PrimeWest Energy Trust.

2008-Mar-24: added Foremost Industries Income Fund to the list. Foremost has been listed on the TSX as an income fund since 2001-Dec-31 and has paid distributions quarterly since then without fail (2001 - $1.00, 2002 - $0.70, 2003 - $0.80, 2004 - $1.35, 2005 - $0.57, 2006 - $1.45, 2007 - $1.60, 2008/Q1 - $0.25). This fund has grown quickly in the last 6 or so years and appears to be managed very well.

2008-Dec-15: Sentry Select Diversified Income Trust (TSX:SDT.UN) announces distribution guidance for 2009, reducing monthly distributions to 0.026 per unit per month.

2009-Jan-4: Although the market prices for these income funds have been slowly returning, there is still a good opportunity to acquire cheap high income-generators such as those shown here, which all exhibit solid performance and reliable distributions with very few downward adjustments over the years that I have followed their progress.

If you would like to try linking to a spreadsheet with more up-to-date information, please click here for a new browser window with a viewable spreadsheet for these trusts.

As one can see from the table, these trusts (and others like them), are excellent income producers. I understand that some investors are nervous when "trust" is mentioned, but in the meantime, the distributions provide good yields. Investing in these trusts would give income generated from the sale of building materials, commodities, energy, real estate, advertising, etc. thus giving some capital stability while providing healthy distributions throughout each month from the profitable underlying companies.

Having said that, Sentry Select Diversified Income Trust shown above is significantly different from the others listed in that the trust's holdings are already diverse, being invested in energy, resources, power, utilities, consumer, industrials, securities, real estate and bonds. The excellent management of the SDT.UN portfolio has resulted in good, reliable performance for years. This certainly makes one believe that they should hold as many units of this trust as possible.

Income trusts - worth thinking about.