Canadian Oil Sands, symbol COSWF, is about as close as you can get to owning your own oil well. The company is exclusively engaged in mining the oil sands of western Canada. Other companies own parts of this oil source, but COSWF is the major player here. Canadian Oil Sands does little else than produce oil from these sands and get it to refiners. In the past the price of a barrel of oil was not high enought to make the relative high cost of mining these sands worth the effort. But with oil prices now averaging over $100 per barrel COSWF, and a base cost of about $27 per barrel, mining these sands is extremely profitable. I expect oil will remain above $85 per barrel for the foreseeable future.
Add in the fact COSWF is still working to ramp up production towards it's goal of 350000 barrels daily and there is ample opportunity for profits. COSWF just increased their dividend from 20 cents to 30 cents quarterly. There is enough oil here to last at current extraction for 30 years plus, so you can count on getting paid for a long time. At the current price the payout is around 4.0% and if Goldman Sachs is correct that oil is headed to $135 per barrel this summer you can expect income to remain steady.
Remember this oil is from Canada, which is a stable democracy and the political environment there is friendly to oil business, unlike current United States policy. I highly recommend purchase of these shares for those who want exposure to oil. Note that dividends in Canada are subject to a 15% tax there before your payment, but can be taken back when you file taxes in the United States.
COSWF does not offer options so I currently do not own it due to STI Hedge Fund trading policy.
Reeves Utility Income Fund... symbol UTG...I have known about this fund for several years since I came upon it while researching utility and telecom stocks. UTG has run up in price nicely since early this year to around $25 per share. They also just increased their MONTHLY dividend from 11.5 cents per share to 12.5 cents per share making the annual payout around $1.50 total. In the past they have paid out a special extra dividend in December each year, but I expect since the increase to 12.5 cents that will likely not happen in the future. Still at the current rate and price the payout is right at 6.0%. If you were patient you likely could get UTG a little cheaper, but that of course is your choice, and frankly buying this closed end fund should be for income and not capital gains. Being a closed end fund, there is a expense charge that goes with the fund, but in my opinion worth the diversity of holdings you get. I really like the stocks in this fund, utilities, telecom, oil, some foreign holdings, high income mortgage reits, MLP's, and even some tobacco stocks. All of these securities are average to above average dividend payers. If you are looking for a safe, steady income producer then this is your fund. Traded on the markets it is easy to buy and to sell.
I do not own UTG due to STI Hedge Fund trading policies, but would buy it in my personal account when needing safe income.
No comments:
Post a Comment