After I thoroughly reviewed the tax law changes, I believe that they should be sold. Not only corporate income will be taxed, withholding rates for US investor will be raised to 41.5%. If anyone of you have further details on the tax changes, please comment.
My total loss from this tax change is about $5800 from all of my positions (so far). I’m just going to take the losses on the chin.
I won’t be selling them out immediately. I will take whatever dividends that I can get at the rate before tax changes are kicked in, and wait for market to reach some consensus. I will probably put the proceeds into either US trusts or partnerships, the other two categories that I have recommended in my high dividend stock lists. I am still lucky in the way that I have diversified my dividend streams into different country and different kinds of business. Otherwise, my losses will be much worse.
I hope that crude oil stops falling here. If it does, rise of crude would help lift these trusts somewhat. But if you want to play the crude oil, you could put the proceeds into many other alternatives. Bottomline, diversification has always been the saving grace in a down market (and also a dragger in an up market). It’s about how greedy you are and how much risk you want to take.
Certainly a BAD day for all Canadian trust investors. I wish that they could have preserved the trust structures for certain types of business.