Getting Paid To Wait

Apr 26th, 2009 – Comment

George from Squamish BC writes about FCE.UN-TSX: HI LOU, I AM INTERESTED IN THIS INCOME TRUST AND WAS WONDERING IF YOU LIKE INCOME TRUSTS IN GENERAL AND WHAT ABOUT THIS ONE IN PARTICULAR? GEORGE Hi George, One of the things that always gets my attention are opportunities to get paid while I’m waiting for a […]


About the Author

Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


Read the author's full profile.


Further Research

Read more about Trusts.


Not WIthout Risk

Not Without Risk

George from Squamish BC writes about FCE.UN-TSX:

HI LOU,

I AM INTERESTED IN THIS INCOME TRUST AND WAS WONDERING IF YOU LIKE INCOME TRUSTS IN GENERAL AND WHAT ABOUT THIS ONE IN PARTICULAR?

GEORGE

Hi George,

One of the things that always gets my attention are opportunities to get paid while I’m waiting for a situation to develop. The fact that Fort Chicago Energy Partners LP is currently paying a 14.1% yield makes it attractive.

But with greater yield there is always greater risk.

If you have an appetite for the current uncertainty in the energy business and the fact that distributions just like dividends are not guaranteed then FCE.UN could meet your needs. When I look at the assets at the company they are quite substantial. Their interest in the Alliance Pipeline as well as their natural gas liquids business, and power generation assets make for a solid base.

The chart shows that FCE.UN has recently peeked above the trend line and has tested the lows at $6.50. The moving averages look to be flattening out from the recent downtrend which is an improvement. Its not an ideal chart but in today’s environment those are extremely hard to find.

It doesn’t look like Fort Chicago is going to take off for a wild ride to higher levels but at a 14.1% yield does it have to? What you want to maintain is the $6.50 level. If that breaks it will get nasty.

I don’t have anything against trusts nor do I favour them. They are a class of investment that I approach like all others. Each case for an investment has to be reviewed in detail.

Happy Capitalism!

Categories: Trusts
Content © Relentless Economics - Charts courtesy Stockcharts.com - Employees Entrance - Optimization Media