Yield Chasing

	Roger Conrad Utility Forecaster.com
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A high, reliable yield can be a thing of beauty. Those who pay too much to get it, however, are dooming themselves to mediocre returns. And a seemingly sweet yield can bring sour consequences—unless you're careful to find out the risks behind an attractive number.

That's why the key to successful income investing is sustainability. It's OK to have a few high-flyers. But the bulk of a conservative investor's portfolio should always be in dividend-paying investments with staying power. That means distributions that are backed by healthy and growing businesses.

The good news is that all the Income Portfolio stocks, bonds and preferred shares match up on that score. At times, some of our recommendations may get a bit expensive and we'll rate them a watch. But these Portfolio members are built for endurance, not necessarily speed.

That's also true of the latest addition to the Portfolio's Stocks and Preferreds segment: Yellow Pages Income Fund. Profiled in detail on p. 4, Yellow Pages doesn't boast the double-digit yields of the Growth Portfolio's oil and gas trusts.

The tradeoff, though, is that you get a business that's infinitely steadier, its finances more secure and dividends—recently hiked 4.4 percent—are more reliable. It's also the largest Canadian income trust, meaning greater transparency as a hoard of analysts has pick over its finances.

Yellow Pages trades at a modest 13 times distributable cash flow, the account from which dividends are paid monthly, and a yield of around 7 percent that's also well-covered by cash flow. Buy Yellow Pages up to US$11 or under C$14.

Any broker should be able to purchase shares for you using its over-the-counter symbol. That's basically the Toronto share (YLO.UN) traded in the US, and it's entitled to all rights and privileges of trust shares traded in Toronto, including the monthly dividend.

Note Yellow Pages generally goes ex-dividend around the 25 of the month for a payment date the following month around the 15.

Like the other Canadian trust in the Portfolio—Great Lakes Hydro—Yellow Pages is relatively insensitive to the energy price cycle. Instead, growth depends on how well management executes its growth strategy from acquisitions and its fast-growing online business. It will be somewhat interest rate sensitive, but that should be somewhat offset by the trust's growth.

For more information on Yellow Pages, call 514-934-2611 or go to http://www.ypg.com/. Note both Yellow Pages' and Great Lakes' dividends should be considered qualified for US tax purposes. They're also subject to a 15-percent Canadian withholding tax, which can be recovered when you file your US taxes if you hold them outside an IRA.

Roger Conrad will be available to take your questions until Monday, May 16. Please use the form below to submit your questions.