The largest owner involved in the Syncrude Oil Sands Project, Canadian Oil Sands Trust (COS.UN) has increased their distributions by 43% to $0.50 quarterly per unit. Higher oil prices have benefited the company in a large way as oil has rebounded since the financial crisis
($43 per barrel - $79 per barrel)
The kicker, and what makes this a weird increase, is that the company is outright stating that the distribution level is probably not sustainable and part of the reason they raised it is to maximize their tax position going into conversion into a corporation for 2011. During 2010 the trust is planning to pay out more in distributions than cash from operations less capital expenditures. Go figure...
Investors in this trust quickly need to get used to changes in dividend levels as the company has historically just adjusted the payout with rising or falling crude prices.
2 comments:
Just like Westshore Terminals, you can't count on COS for stable income...
Aye, it will be interesting to see how the tax law changes affect the royalties. I too hold shares in PWE but they have not raised their dividends like COS.UN has.
I think the key here is to watch the company's announcements on sustainability which you pointed out here. Dividends do not matter if there's not enough funds to pay it out.
If they can provide a sustainable dividend without cutting/increasing them all the time, taxes or not, they would get a better rap.
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