Opinions
Ross Healy
Canoe EIT Income Fund
EIT.UN-T
DON'T BUY
Aug 13, 2009
He is quite indifferent to this one currently. Looks fairly extended from his point of view. Also, in another year or so, income trusts will have to convert and there could be some concerted selling when they cut distributions.
$11.320
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COMMENT
Pays an 11% dividend yield. How are they paying that? They probably hold a lot of Canadian infrastructure but those stocks pay only 3-4%. The US component is also dragging down that yield. There's a mismatch here in holdings vs. the 11% yield. The total return will probably be 5-7%, but the high yield will limit share performance. This is a warning. Look at their top holdings and see how you feel about that.
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COMMENT
Not a fan of closed fund since the underlying securities will deviate from the net asset value of the fund. There are big dislocations. Underlying holdings are good quality companies. On a weighted basis, the yield is 3%, but the fund is paying 8%. This comes from the capital gains. It is not pure yield.
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