Should I buy, sell or hold the following Canadian monthly dividend-paying stocks?

rvilmur answered 4 months ago …

Since all these stocks are way down from their peak prices, you are probably sitting on losing positions. To answer your question you have to predict the future price of oil and natural gas and have an investing time frame.

I feel that peak oil is real and that over time the price of oil and natural gas have to rise to justify further exploration. The current world recession has slowed demand and until there is clear evidence of a recession turn around, prices will stay moderate and volatile. Current price levels are not high enough to encourage the exploration and development of the more difficult and marginal deposits.

Now, specifically to the Canadian Oil and Gas Trusts, we still have unfavorable conditions for enough earnings power for them to start increasing their dividends again from the current greatly reduced payouts. On top of that there is the 2011 change in tax status for them that will push most of them to become ordinary corporations. AAV has already decide to do so and has eliminated its dividend; so there is precedent for the others to follow.

Should you sell, hold or buy more? You need to answer what would you do with the money if you got some of your initial investment back by selling them. If you can find better investments then you should sell. If you are happy with the current dividends which are hard to replace at current percentages, then hold. If you think that oil and natural gas prices will recover soon, then consider buying more. The prices of these stocks have been following the prices of oil and natural gas.

In my opinion, your stock list should be treated as trading stocks and not dividend stocks due to the risk of the dividend being further reduced or eliminated.

Some financial and high dividend (quarterly) paying, and safer stocks due to government guarantees on the loans and the now high short term to long term interest spread are NLY, HTS, ANH, and CMO. I would look at these as diversification from the Canadian stocks and less risky.