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New Addition to My Model Portfolios -- Barclays Advantaged Equal
Weighted Fund |
Published: June 2, 2005
My monthly High-Yield
Investing
newsletter is devoted exclusively to income-oriented investments. In
each issue I not only introduce my readers to a variety of new high
yielding investing ideas, but I also provide continued guidance on
several dozen of the market's best and brightest income-generating
opportunities. I organize these various picks into the following four
model portfolios...
Income Anchors
Portfolio -- This portfolio
contains dividend-paying stocks with above-average yields (versus the
S&P 500) at the time of purchase. And since dividend payments are by
no means guaranteed, this portfolio focuses on financially sound
companies that should have the ability to continue paying sizable
dividends in the years ahead.
Dividend Over-Achievers Portfolio
-- This portfolio focuses on quality investment opportunities that offer
above-average dividend yields. These include real estate investment
trusts (REITs), royalty trusts, master limited partnerships (MLPs),
preferred shares and income deposit securities, among others.
Double-Barrelled Growth
Portfolio -- Stocks in this portfolio offer investors the best of
both worlds -- a steady income stream and strong capital gains. Although
some of the stocks in this portfolio may have average or below-average
dividend yields (versus the S&P 500) at the time of purchase, all
are expected to deliver above-average returns over the long term.
Dividend-Focused Funds Portfolio -- This portfolio includes a
mixture of income-oriented-ETFs (exchange-traded funds) and a variety of
outperforming mutual funds. These funds should provide both steady
income and much-needed diversification to any income portfolio.
In the analysis below I'll
provide you with a closer look at a closed-end fund that I'm now
considering adding to my Dividend Over-Achievers Portfolio...
Barclays Advantaged Equal Weighted Fund (BAE-UN.TO, $11.25) --
Shares of this Canadian closed-end fund are trading at bargain prices
thanks to the fact that the Canadian dollar is still cheap. Its 7.4%
yield reflects the distributions from an underlying portfolio comprised
of the 100 largest dividend-paying income trusts listed on the Toronto
Stock Exchange. This portfolio includes such high-profile Canadian names
as Fording Canadian Coal (FDG), Canadian Oil Sands (COS-UN.TO), Peyto
Exploration & Development (PEY-UN.TO), and Transcanada Power (TPL-UN.TO).
Canadian income trusts are about to become even higher powered this
fall, when the sector will be included in the country's benchmark stock
market index. As about 50 of the largest income trusts join the index,
they will be added to the portfolios of funds that track the index.
Furthermore, the inclusion of income trusts to the benchmark will also
make them more acceptable to institutional investors.
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Distributions paid by the Barclays Advantaged Equal Weighted Fund are
tax-advantaged, as they consist mainly of a non-taxable return of
capital and capital gains. As with most foreign investments, U.S.
investors are charged a 15% withholding tax, but that would be refunded
by filing IRS Form 1116. (Thanks to subscriber RGB for pointing out that
you can also take a Schedule D: Other taxes paid deduction.) When the
fund terminates on November 30th, 2014, investors are expected to
receive their respective share of its net assets.
Action to Take: This fund is a great way to tap into the
high-yielding Canadian income trust sector. With many of the trusts in
its portfolio about to be included in the country's benchmark stock
market index for the first time, now seems like an opportune time to
jump on board. As such, I recently decided to add shares of BAE-UN.TO to
my Dividend Over-Achievers Portfolio .
Disclosure: Dr. Carla Pasternak owns shares of BAE-UN.TO.
Important
Note: The above article was merely a small excerpt from a
recent issue of our premium, income-oriented investing newsletter -- High-Yield
Investing. In each issue of that newsletter, editor Carla
Pasternak delivers a host of other investing ideas and tips designed to
help you earn steady gains and above-average income from your portfolio.
To receive your copy of our most recent High-Yield Investing
newsletter, as well as other guidance similar to this every month,
you'll need to register for this separate publication. Please visit one
of the following links to continue...
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Please Note: The above article was merely a
small excerpt from an issue of our premium income newsletter -- High-Yield
Investing. In each issue Carla Pasternak presents
a wealth of information and timely investment ideas to help you earn a
steady income stream from your investments. To receive a
complimentary three-week trial or to learn more about our High-Yield
Investing service, please visit the following link: http://www.StreetAuthority.com/subscribe.asp#hy |
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