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There is a proposal in Canada to limit foreign ownership of shares to 50%, aiming to bring in higher tax revenues from Canadians, who pay ordinary-income rates on royalty trust dividends.
There are two problems with this as it pertains to Canadian oil and gas trust dividends: The amount is considered ordinary income, so you lose your QDI tax status on such payments.
While the 15% rate applies to most corporate payouts, that's not the case for most real estate investment trust dividends or for bond fund dividends, which are really interest and are taxed at ordinary income rates of up to 35%.
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Certainly, the wonderfully high trust dividend yields, ranging from 10% to 14%, remind you that you're being paid for taking on considerable risk.
Governments that can demonstrate that they are reliable, fair and responsive can reap a trust dividend with tangible economic and social benefits.
The second difference is that the Canadian trusts' dividends are eligible for the 15% tax treatment in the U.S., versus full taxation for all the U.S. dividends.
Another problem with the Spider: As the first ETF, it had to appease a wary SEC by organizing as something familiar a unit investment trust, where dividends are paid out to investors.
Alliance, based in Dundee, has 50,000 private investors; many of them pensioners who rely on the investment trust's dividend, which has increased every year for nearly half a century.
If there is space left in your sheltered accounts, you would use it for high-turnover stock mutual funds that throw off short-term capital gains, real estate investment trusts whose dividends are also taxed at ordinary rates and individual stocks you plan to trade a lot.
At $11.39, the trust's dividend is just under 10%.
The consensus is that as long as oil stays above $60, the trusts' monthly dividends will continue to flow nicely.
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