Oil prices are high and heading higher in this investor's opinion. It's the whole supply/demand thing. High oil prices are a drag on the entire economy, NFI included. Dividend donkeys will be moving their money out of NFI to other high yielding investments. The obvious choice is a thing known as a CONROY, an investment vehicle which has a high yield and benefits from high energy prices.
Exactly. The dividends which match the cash dividends of KMP and EEP are stock only dividends and are treated like a split. Besides getting notable appreciation in stock price, these stocks compound faster than their REIT counterparts as they are somewhat discounted..don't know how long that will last.
If you hold them a year, the dividends are taxed at ltcg rates. kmr, eeq, wsba,awba, and mdc. In a standard account, your return can be much better than the REIT counterparts because of estimated taxes on the REITs.
If the PIK stock gives a 10% dividend, your basis changes to 91% on each share. If you need cash and sell, you get mostly return of capital. KMR and EEQ have not been around very long, but you can track the performance of KMP and EEP for a comparison.
I bought some KMR in June and EEQ the day I found out it existed..in July.
Could you please explain how the income from KMR and EEQ is tax deferred? Is this because they issue stock dividends instead of cash dividends?
I agree with you that the CANROYS are over-rated, esp with all the withholding for US citizens (if I'm recalling correctly)
"Can Canroys give me tax deferred income?"
Short answer, yes and better than that, some can give you tax free income.
How, you ask, by classifying the dividend as "return of captial". Which is exactly what PVX and PWI do with there dividend. PVX and PWI have been classifying their dividends as 85% return of captial and the other 15% is classified as a royalty payment. This gets taxed at a much lower rate than normal dividends. They also take out Canadian Tax, at a rather small percentage, but you can apply that to your taxes due in the US, or can submit Canadian forms to get the funds returned to you directly. This is complicated and I have never done it, I just use the Foreign Tax Credit on the IRS Form 1040 long version.
Bottom line, both PVX and PWI have been trading up lately because people are starting to realize they get a dividend that is not a dividend and can plow the funds right back in and end up with a 85% ROI with no tax liability until they sell the stock. At that point they would pay about 15% on the capital gain.......
What a deal.....
Disclosure: I own about 2,500 shares or each PVX and PWI. Have held them for over two years now. Just love the monthly Return of Investments (aka, dividends).
Canroys may be overvalued as they don't know how much oil and gas are in the ground. These entities have been reducing their estimates.. You certainly are trying hard to find fault with this stock.. Why don't you leave the dark side and join us, Darth?
Weak, very weak. Go back to your script.
<<Oil prices are high and heading higher in this investor's opinion. It's the whole supply/demand thing.>>
Gee, markets work that way, don't they?
<<High oil prices are a drag on the entire economy, NFI included.>>
Not if high oil prices are symptomatic of a stronger global and/or U.S. economy.
<<Dividend donkeys will be moving their money out of NFI to other high yielding investments. The obvious choice is a thing known as a CONROY, an investment vehicle which has a high yield and benefits from high energy prices.>>
Duh. CANROYS, Herr Schei�ekopf.
Don't improvise from your boiler room script.
Try CANROY as in Canadian Royalty.
<an investment vehicle which has a high yield>
You do know about the Canadian taxes that have to be paid right? That really affects the yield.
BTW, do you know of any CANROYs that just had 1) record numbers last month 2) an appreciating stock price despite an increase in the number of shares shorted or 3) have a sufficient amount of cash on hand (in the form of retained earnings) to grow the company without having to tap equity markets.
For more on this, check out www.nfi-info.net
One last thing, how's that short at $38 treating ya?