Q: What do you think of FRU.ca vs NPI at these levels for a long term hold? Are there tax consequences for a royalty company I should be aware of?
I own CNQ, ENB, CPX, H and a little HSP already but I'm finding it hard to resist the dividends (and hopefully growth) of FRU and NPI. Should I add to one of the companies I already own or buy NPI or FRU as well?
I own CNQ, ENB, CPX, H and a little HSP already but I'm finding it hard to resist the dividends (and hopefully growth) of FRU and NPI. Should I add to one of the companies I already own or buy NPI or FRU as well?
5i Research Answer:
For a Canadian royalty company, there are no differences in taxes to the investor. NPI is a utility, whereas FRU is a royalty co. with its fortunes tied to production and prices. Thus, they are quite different. Both are cheap with nice dividends that are most likely secure (not guaranteed, and FRU will be more cyclical). NPI has lots of debt but steady cash flow. FRU has a strong balance sheet. We would be comfortable owning either for income, with any gains seen as a bonus. We cannot get personal but would be fine adding to the list mentioned, depending on how many stocks an investor wants to hold in total.