Another raise to wrap up my holidays, I'll take it. Canada's largest directly publisher, Yellow Pages Income Fund (YLO.UN) has raised its cash distribution to $1.17 per unit per year, from the previous $1.13 per unit, this is a raise of 3.5%. The cash distribution currently consists of mainly interest income, with a small portion consisting of dividend income and return of capital. Interest income is taxed much more heavily than dividend income, which makes income trust distributions less valuable to a Canadian investor compared with eligible dividends. I own 385 units of Yellow Pages Income Fund so this raise represents $1.28 of extra cash being deposited in my investment count each month of the 15th.
Yellow Pages announced this raise at the same time as reporting their latest earnings numbers which were very solid. Consolidated net earnings were up 6.3%, while print directory organic growth pushed forward 4% and organic online revenues rose 44%. Management expects to grow distributable cash 8-10% in 2009, which is the same growth target they are currently working on for 2008.
Here is a glance at Yellow Pages' recent distribution growth:
2006 - $1.03
2007 - $1.10
2008 - $1.15
This represents a compound annual growth rate of the distribution of 5.7%. Yellow Pages expects to at least maintain its current level of cash distributions after converting from an income trust to a corporation on December 31, 2010.