| | For some time, I have been wondering why Income Trust Funds can afford
to have such a high yield, at a rate 2 or 3 times higher than
even the dividend yields at Canadian banks. Just to give you some perspective, Fording
Canadian Coat Trust (FDG.UN on the tse) gives a yield of
7%. It distributes cash quarterly, and it's paying out $1.80 per trust
unit in October; that's a lot for those who are not familiar with the
world of investments. The Canadian banks, known for their rewarding
dividend yields, pale in comparison with such trust units. CIBC (CM), which has the highest yield of all banks,
pays $2.72 per share in the entire year.
Today I found my answer in the Toronto Star.
Dividends [non Trust Units] are already taxed at the corporate level when a company earns money, and then they are taxed
when received by the investors. Income trusts try to get around that by
paying investors regular distributions from cash flow, effectively
avoiding corporate tax, with investors paying tax on the income.
This whole taxation system pisses me off. Dividends (non-trust unit) are actually taxed
TWICE (1st at the corporate level, 2nd at personal level) before they
get to the investors? This is f*cked up.
|
| | Posted 9/30/2005 1:11 AM - 2 views - 3 comments
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