“Do me a quick favor: Think back to the fattest, juiciest, most impossibly generous yield of any stock you’ve ever had the good fortune to own.”

“Now double it.”

“That just hints at the kind of cash flow you can pocket right now from a unique investment vehicle that offers not only breathtaking dividends, but major capital-gains potential… less risk than stocks… and a tax break to boot.”

“If pulling down annual dividend yields of 15%-20% sounds good to you, read on.”

Pinch me quick. I think I’ve died and gone to income-investing heaven. Because I’ve discovered a unique asset class whose yields are truly angelic.

When you see how much these unusual instruments are yielding, you might think it’s a typo. A few are paying even more than 20%. At first I thought the decimal point was in the wrong place!

But I checked. It’s no typo, my friend. We income investors have simply been beaten down and brainwashed by years of 1% CD rates and stock market yields of 1.7%. Those aren’t yields, they’re bread crumbs.

If you’re a yield junkie like me, you’ll appreciate this letter. Because today you’ll see how you can pocket dividends every year that are by themselves double the stock market’s historical total return (dividends plus capital gains)… all while taking on less risk than the blue chip S&P 500.

Look North to Give Yourself a Raise

The best way possible for U.S. investors to double, triple or even quadruple their current investment income right now is to look north.

Thanks to a unique corporate structure authorized by the Canadian government to attract capital to its often-overlooked markets, cash-rich companies are converting themselves into dividend powerhouses called “income trusts” yielding 10%, 15%, 20%, 25% and up.

If Canada wanted to get on the income-investing map, they’ve hit the nail on the head. I just ran a computer ranking of the highest-yielding partnerships, units, preferred stocks and REITs in North America, and 15 of the top 20 are now Canadian income trusts.

This is big news. I’ve spent my career helping investors harness the unstoppable wealth-building power of dividends. I’ve edited Utility Forecaster for the past 16 years and have lectured around the country and written books on the subject.

In all those years I’ve never seen dividends this high that are also this safe—or that have such a good chance of giving you a nice capital gain too. Even better, these huge yields are taxed like any other dividend at just 15%. Most ultra-high-yield instruments, like limited partnerships for example, are taxed as ordinary income.

I’m not naïve about the dangers that sometimes lurk behind high yields. Some of these trusts are throwing off insane-sounding dividends of 28.9%, 32.3% and 35.1%. I don’t recommend rushing out and blindly buying these super-aggressive yielders, because some of these companies might be in real trouble. But this is the first time since I started Utility Forecaster in 1989 that I’ve been this impressed by an asset class.

Introducing your Canadian connection

An opportunity this special deserves the attention of all income investors. It also warrants a service investors can use to safely pick the best of these vehicles for themselves.

So I’ve started one: Roger Conrad’s Canadian Edge. I can confidently state that it’s the best service of its kind in the country… because it’s the only one in the country!

There’s no other service that translates all the wrinkles in this Canadian market for U.S. investors. For example, the most popular trusts in Canada are not always the best ones for American investors to buy. And many of the best Canadian trusts are not traded on U.S. exchanges. But I’ll show you how to buy them right here in the U.S.

I’ll tell you all about my new service in a minute. But first, let’s take a closer look at these unique high-yielding instruments.

What ARE these things, anyway?

An income trust is simply a corporate structure a Canadian business can choose to avoid paying taxes. They create a trust subsidiary and flow all of the profits into it, where they can’t be taxed. It’s like taking an entire company and putting it in an IRA.

After retaining a mandatory 15% as an operational safety margin, they pass on all of the remaining cash through to shareholders (called “unit holders” in the trust world), where it is taxed in their hands. In this way, they’re a lot like REITs here in the U.S., except trusts can be in any business, not just real estate.

On top of the joy of not paying taxes, some companies—especially low-growth firms—find they can boost their share price by converting into income trusts. Such “plain-vanilla” companies are often ignored by investors, even when they have decent cash-producing assets. An income trust structure makes their hidden cash flow visible, attracting investors who might otherwise overlook them.

Income trusts must be doing something right, because their popularity is soaring up north. More than half of all new equity offerings in Canada in the past two years have been income trusts. What’s really striking is the wide variety of businesses that are now choosing the trust route, which was originally strictly an oil-patch affair.

Not just oil and gas anymore

Canada authorized this unique structure in 1986 to attract investors to energy-exploration firms, a backbone of the Canadian economy. All the first income trusts were issued by oil and gas companies.

But income trusts now include large and small businesses across many industries: restaurant chains, fish-packing plants, pipeline operators, even the Canadian yellow pages now use this unique pass-through device to flow cash and tax benefits to their investors.

Not long ago, sophisticated investors saw income trusts as something of a gimmick. But now, these backwater securities have gained legitimacy—and are seen as an excellent way to divert income and tax advantages to shareholders.

Profit from real ownership for once

When it comes to investing, buying a Canadian trust is as close as you can get to actually owning a business. Because YOU keep the profits.

When you buy a stock, you’re part owner of the company. But you’ve got zero say in how much of the profits you get to keep. Whether management passes on a single cent of profits to you is completely up to them.

But you can be sure they’re getting their share. At the extreme, you’re paying for $6,000 shower curtains, as we saw with Tyco. Even in conservatively run S&P 500 blue chips you’re footing the bill for a regal executive lifestyle. After paying for wood-paneled offices, private jets and millions in stock options, how much is left over to distribute?

In contrast, trusts pay you all the cash the business makes after taking out a mandatory 15% to reinvest in the operation.

Right now, many of these flow-through vehicles are paying 10%-15% a year. And since management legally has to pass the profits along, these yields rise automatically as business conditions improve or operations expand. That explains why oil and gas trusts in particular have been especially lucrative over the past few years of rising energy prices.

But some of the most exciting income trusts I’ve found are not in the energy sector at all. And their yields are often steadier, since their revenues don’t fluctuate with energy prices. Even better, they are cheaper because so few U.S. investors know of them.

Huge yields and the occasional home run, too

When you buy an income trust, you’re not in it for the capital gains. All you can really ask is that it maintain its share price and keep sending out those fat dividend checks every month.

But there are some delightful exceptions to the rule. Many trusts have grown their businesses nicely (mainly through takeovers) and have steadily increased their distributions. Enerplus Resources, for example, was worth barely $9 million at its birth some 18 years ago, and now has a market cap of $3.3 billion. When you consider it has returned 85% of its earnings to unitholders along the way, that’s incredible growth.

Owning one of these growing income trusts is a classic case of having your cake and eating it too. Energy Savings Income Trust demonstrates this perfectly. Over the last three years, units of this natural gas retailer have shot up 449%, thanks to 13 hikes in its distribution. And even after this rocket ride it still yields 5.8%.

Likewise, over the past three years, investors have more than doubled their money in Superior Plus Income Fund. Since its inception in 1996, Superior Plus has increased its cash distribution eight consecutive years—from $1.15 a unit to $2.22 now. And its unit price has risen from $11 to $28, for a 154% capital gain on top of the dividend.

It’s not only energy-sector trusts that have thrown off big gains. RioCan, a hotel trust, has given its unit holders 24.6% annual return for 10 full years. That compounds to a total of 801%. Meanwhile, its dividend has tripled.

Guess what! These dividend juggernauts are
safer than stocks!

Investors are so conditioned to seeing high yields as danger signs that it’s natural to assume that income trusts must be risky. But statistics show that income trusts as a group are less volatile than the stock market as a whole.

What’s more, trust owners don’t have interest rates hanging over their heads like a dagger—as is the case with so many income investments. Unlike bonds, which get creamed when rates rise, trusts don’t rely on a fixed coupon payment. They have underlying businesses that generate cash, so their payments actually tend to go up over time. Find a bond that will do that for you!

And while trust unit prices do fluctuate, it doesn’t much matter if you’re holding for the long term. After all, the principal amount fluctuates in any income investment, so why not get paid twice as much while you wait?

These trusts are also safer than stocks for another reason: the profits pass through straight to you every month, leaving less room for earnings surprises and shady accounting. With no spare cash to play with, management is forced to focus on its core business and not get sidetracked on wild expansion schemes.

A nice problem to have

Obviously, eye-popping yields are the big attraction here. An investor I know put his million-dollar retirement portfolio into these and now he has more income than he knows what to do with. But I don’t hear him complaining about his problem!

For the millions of retirees who once lived off income investments, and now find it impossible, our northern neighbor has made it easy again.

Just think about it. You can easily pocket $10,000 to $15,000 a year for every $100k you put into these cash cows. And you get your money monthly—you don’t have to wait around three or six months. So it’s not only convenient to pay monthly bills, but you have the cash sooner to reinvest and compound for you.

How a boneheaded mistake sparked my new venture

I first got interested in income trusts a couple of years ago while looking for alternative income sources for my subscribers. In January 2003 I recommended Enerplus Resources at $17. Within a year we had already pocketed $4.28 in dividends (a 25.2% yield), and were sitting on capital gains of 71.5% to boot. I went on to recommend a few other Canadian trusts and enjoyed similar great returns. I was on a roll—or so I thought.

Then I came across Inter Pipeline Fund. It had a great yield and the underlying business looked good, too. So I recommended it to my subscribers, sat back and looked forward to more of the same steady dividends and capital gains.

Then something weird happened. The company treasurer called me and told me that American investors weren’t allowed to own it. Here was a company that traded in the U.S. whose charter barred Americans from buying it—or even receiving dividends! That was a first for me!

Turns out that even though Inter Pipeline Fund looked and acted like a trust, it was really a limited partnership. And Canadian partnerships operate under quite different rules than trusts.

I got a few angry letters over that one… and I have to admit that I was embarrassed. But there was a good reason I had no idea about Inter Pipeline’s policy: no one else did either—at least in this country.

That’s when I made a decision

Rather than write off this extraordinary asset class as a regulatory minefield unfit for U.S. investors, I flew to Toronto to speak with Canada’s largest investment-information provider, MPL Communications.

These guys are Canada’s premiere financial publishers and are the most complete source of information on income trusts in the world. They have a full-time staff devoted to digging up every tidbit of information on this increasingly important sector of the Canadian financial markets. Their database covers more than 200 trusts across all industries.

Their job is to report on trusts from the point of view of Canadian investors. And they’re superb at it. If you live in Canada, by all means go to MPL. You don’t need me. But if you live in the U.S. you need someone to “translate” the information for you, pointing out trusts that may not be so good for U.S. investors as they are for Canadians.

For example, of those 200 trusts I just mentioned, 150 are off-limits unless you are Canadian. So right off the bat you have a 75% chance of making a bad move unless you educate yourself.

If I had been working with MPL earlier, I would have known at a glance that Inter Pipeline Fund wasn’t actually an income trust—because it’s not even on MPL’s master list of Canadian trusts.

With MPL as my partner, I now have the information I need to invest with total confidence in this sector. With Canadian Edge, you’ll have it too. We’ll have our fingers on the pulse of everything that matters: business conditions in Canada, regulatory activities, government ownership restrictions, currency prospects, tax policy… and what a U.S. investor needs to know on top of that. Is it really a trust (or a limited partnership in disguise, like Inter Pipeline)? Does it focus on tax benefits that only Canadians can use? Is it in a sector that could run into economic trouble ahead?

How we’ll sift the gems from the duds

To make sure our income is safe, I’ll be doing the same kind of legwork that I’ve done for 16 years at Utility Forecaster. In all that time, I’ve never had a down year in my Income Portfolio.

It all comes down to the reliability of a trust’s cash flow. And that means analyzing the guts of the business. Rather than getting blinded by a dazzling yield, I focus on the reliability of distributions. For oils and gas trusts I also give you the all-important “reserve life” so you know how many years proven reserves will last if pumped at the current rate. The longer the better. Some of these beauties have reserves stretching out 35 years, while others have barely a year or two left. Some of these super-high yields aren’t what they appear. A big dividend might be a special one-time event. Or maybe the dividend isn’t big at all, but the company’s stock has plunged for some reason, making the yield look huge.

“Question: These trusts sound great but
what if interest rates rise?”

As I mentioned earlier, income trusts are less sensitive to interest rates than other income investments. In any case, a rise in rates has long been priced into all rate-sensitive assets, including income trusts. Only if the Fed quickly and over-aggressively hikes rates to 8% or 10% will there be a rate shock. And with inflationary pressure in the economy now so mild, this is extremely doubtful.

However, as with any investment, economic trends can work against you. For example, a drop in energy prices would mean lower profits for oil and gas trusts and less to pass through to you. If we have a string of mild winters…if peace and love break out in the Middle East… if we ban gas-guzzling SUVs… then who knows? Meanwhile, terrorists are striking in Saudi Arabia and global energy consumption is tickign up every day, so it doesn’t look like oil or natural gas prices are coming down any time soon.

Then there’s the risk of buying into a lousy underlying business. While the income trust structure tends to attract mature and cash-rich companies, they’re not all created equal.

It's rare for an income trusts to delay or eliminate a payment. But it happens. For example, in 2002, Sun Grow Horticulture Income Fund, a peat moss maker, couldn’t meet its profit forecast because of rising energy costs. To avoid disappointing investors, it borrowed money to make its distribution—not a financially prudent move. Sun Grow later did cut its distribution.

You'll never find a shaky outfit like Sun Grow in our Canadian Edge portfolio. And to be even more on the safe side, we’ll insulate ourselves by diversifying our trusts among different businesses
and industries.

keeping an eye on the latest legal developments

In return for fantastic low-tax yields, I see two potential headaches down the road that you might run into if you buy an income trust. I stress "potential", because they are just theoretical at this point.

First, it has been argued, but not proven, that unit owners might have to pay off trust debts personally in the event of bankruptcy.

This has never actually happened in the 18 years these trusts have been around. But even the possibility has scared off institutional investors. The good news is that to be on the safe side, province after province is passing laws protecting unit holders from this problem. As this remote legal liability is slammed shut, the path will be clear for big players to snap up these high-yielding instruments for pension plans. This flood of new demand can only be good news if you already have a position.

Second, there have been rumors about limiting foreign ownership of Canadian trusts to 49% of the units outstanding. After all, these high yields and special pass-through treatment were designed to help Canadian companies and Canadian investors, so they want to keep the benefits at home.

Since there are dozens of great trusts you can buy right now with foreign ownership of 2% or 3%, this is really a non-issue. If such a rule were enacted, a few trusts might have to issue more shares or merge with another company. This could cause dilution or knock management off track. (In Canadian Edge I will alert you long before a trust gets anywhere near the 50% level so you can avoid it.)

What you’ll get as a charter subscriber

Roger Conrad's Canadian Edge is a web-based newsletter that you can access the instant we release each monthly issue. You can then easily print out the issue from your computer if you wish.

I’ll email you at the beginning of each month when a new issue of Canadian Edge is released. The email itself gives you an overview of the current Canadian trust scene plus links that take you straight to the complete issue on our subscribers-only website. The site is easy to use and puts all the information at your fingertips.

In addition to your monthly issues, you will also get Flash Alerts whenever I have to pass on “can’t wait” news about any of our trusts. But please understand this is not a trading service. I’m not going to email you and tell you to jump into something by noon or forget it. We’ll probably hold most positions a year or two. Some you can probably buy and hold forever. Others are in businesses that we’ll want to keep a closer eye on.

Here’s a peek at what you can expect in every issue of Canadian Edge:

Look at what else you get…

As a charter member to my new service, you’ll also receive up to six special reports I’ve prepared especially for new members.

Here’s a peek at the three you get with a one-year subscription:

Come on board for two years and you’ll receive
these three additional reports:

A comprehensive service for committed income investors

Roger Conrad’s Canadian Edge isn’t for everyone. You will be part of an elite investment alliance—not a mass-circulation service.

I want to make sure my new service does what it’s supposed to do for you: take the guesswork out of choosing a safe, high-yielding trust without any hidden liabilities that could trip up a U.S. investor.

There are more than 200 income trusts in Canada. You shouldn't even consider 100 of them, unless you're Canadian. And the other 100 contain a few nasty surprises. Canadian Edge gives you a handful of the healthiest. Why roll the dice when you no longer have to?

If you have any questions once you’re on board, feel free to call or write. I’ll get back to you personally. That’s a promise I’ve kept for 16 years to 25,000+ Utility Forecaster subscribers, and I’m certainly not going to stop now.

“OK, Roger, it sounds good.
But how much does it cost?”

A year of Roger Conrad’s Canadian Edge, which entitles you to a year’s worth of advice, complete with buy and sell signals, plus as-needed updates—emailed to you within minutes of my investing decisions—costs $500.

But as a Charter Subscriber and current reader of mine, you can sign on now for just $399 (with a 100% money-back guarantee, of course). When the Charter Period runs out, and new subscribers are paying $500, you can pat yourself on the back for acting early. In fact, my publisher plans on raising the price to $1,000 a year once the service is up and running.

On a $100,000 portfolio, you can easily pocket $15,000 in dividends alone per year in these trusts—and plenty more if you want to be aggressive. Is doubling or tripling the yield you’re currently pocketing from your income investments—while taking on no additional risk—worth an annual fee of $399? Is it worth $1.09 a day to make sure that the trusts you pick won’t turn around and bite you in the you-know-what?

Only you can answer that. But our guarantee makes the membership fee irrelevant at this point, because you can get it all back any time you want. No fine print. Take the whole year to decide.

If Roger Conrad's Canadian Edge isn’t everything you expect, I want you to ask for your money back. That’s what the guarantee is there for. But I’m not too worried about cancellations. I think that once you grow accustomed to that steady stream of checks in your mailbox every month, you’ll want to subscribe forever.

Send for your free welcome package today

As a Charter Subscriber, you’ll receive a comprehensive Canadian Edge Subscriber’s Guide to help you out. This handbook explains trusts inside and out and tells you how to use my service to make serious money. There's no cost for this invaluable tutorial—it's yours free to help you get off to a running start.

To review, here’s what else you’ll be getting for $1.09 a day:

There’s one last thing I’d like to leave you with today. We all know there’s no such thing as a free lunch. But Canadian income trusts come pretty darn close. When those 10%, 15% and 20% dividend checks lap in every month like waves on a beach, you’ll recoup your initial investment before you know it. At that point, every check is pure gravy. And any capital gain down the road is icing on the cake.

When you consider the stock market has historically returned 9% to 10% a year, beating that right out of the gate in dividends alone is nothing to sneeze at.

So why not see for yourself?

As these trusts continue to shower smart investors with cash I guarantee you’ll be happy you came on board at the start.

Sincerely,

Roger Conrad
Editor, Roger Conrad’s Canadian Edge

P.S. Try Roger Conrad’s Canadian Edge FREE for a year! That’s right—sign up now and take the next 12 monthly issues—plus the special reports—while you decide if my service is right for you. If it’s not, no problem. I’ll return your entire payment—100%—and all the accompanying investment materials you receive will be yours to keep.

YES, ROGER, I’m ready to pocket the world’s highest (and surprisingly safe) yields with the very best Canadian Income Trusts. Sign me up for Canadian Edge and send me all the special reports listed below, new issues every month, plus all the updates I need to maximize my profits. I also understand that if I don’t wish to continue, I can drop out at any time during the first year of my subscription
for a 100% refund.

On that basis, please enter my subscription for: