Friday, August 8, 2008

yellow pages hikes distribution

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.


Dividend Growth Investor said...


It's always great to receive an dividend raise. I was wondering if you knew a site about the fate of canadian income trusts after 12/31/2010? I was pretty skeptical about energy canroys several months ago, yet if they could somehow maintain their dividend payments that would be so cool

Doug said...

"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."

I don't know much about income trusts, I assume you mean 1.28 per unit, it that right?

MG (moneygardener) said...

Sorry dgi, I don't know of a good source for that.

doug, No, I meant what I wrote, although I wish it meant an extra $1.28/unit/month.

Doug Mehus said...


Yellow Pages Income Fund is the largest portion of my non-registered equities portfolio, consisting of 261 units so this distribution increase is most welcome. As well, since I'm enrolled in the Dividend Purchase Plan with my online discount broker (TradeFreedom Securities), these historically low prices for YLO.UN is an excellent opportunity to continue accruing new units at much lower prices and ultimately get my average price per unit down.

Other than that, I own 132 units of TransForce Inc, 25 shares of CIBC and 25 shares of Bank of Nova Scotia.


Disclosure: I work in the financial services industry as a full-time CSR at an HSBC Bank Canada branch.

Anonymous said...

I currently own a small business. Every year the YP rep comes by to sell me a bigger ad than I had previously. I decline each time. I live in a condo, every year you see the books piled up in the lobby with no takers. Each year the pile gets bigger and bigger. The rep then tries to sell me a pay per click solution to drive traffice to my website. This is part of YP's shift to increase online revenues. They have a partnership with Google. In reality they are a Google re-seller. The YP PPC solution runs about $2.00 to $2.25 per click. Instead of this I sign up with Google directly through Google Adwords. The cost per click is about 50% less than with YP and the quality of the hits is just as good.
We ask each new customer to our business how they found us and Google beats YP by a margin of 3:1
We are spending about $125.00 per month on Google and $500 / month on YP. We are very quickly shifting our spending from YP to Google. YP may talk about increasing online revenues when in fact they are re-selling Google Adwords. I wouldn't own the units in such a business that will slowly shrink overtime.