Real Estate

• In the U.S. real estate investment trusts, or REITs, are companies that own investment real estate properties and the income trust shares trade on the stock exchanges. REITs can hold commercial property, medical offices, apartment buildings or shopping centers. REITs pay no income tax and are required to pay out at least 90 percent of their income as dividends.
  
  

Canadian Trusts

• Canadian income trusts are popular investments in both Canada and the U.S. The trusts are organized under a code of Canadian tax law that requires them to pay out the majority of their earnings as distributions. There are Canadian income trusts in a wide range of business, but about half are in oil and gas exploration and production. Canadian trusts are actively managed businesses and are allowed to add assets and increase their portfolios.
  
  

American Energy Trusts

• In the U.S., energy royalty trusts are stocks that pay out the income earned from the production of developed oil and gas fields. The return of the shares is based on the production of the wells and the current energy prices. U.S. energy trusts are considered to be depleting assets as the wells will slowly decrease in production.
  
  

Managed Trusts

• There are a wide range of closed-end mutual funds and unit investment trusts issued by the financial services firms called income trusts. These funds will hold a specific type of security or asset with the goal of paying a high current income to investors. Each individual trust should be analyzed to determine the type and risk level of securities held in the trust.
  
  

Alternatives

• In the U.S., stock market companies can be formed as master limited partnerships or limited partnerships to hold assets that generate a large amount of free cash flow. MLPs and LPs can be for oil and gas exploration and production, pipelines, coal mines, timber production and ships. MLPs are more popular than royalty trusts in the U.S. because they are allowed to actively grow their asset base, which could lead to increasing income over time.
  
  

Potential

• Income trust, MLP and LP stocks are purchased to provide a high rate of income in the form or monthly or quarterly distributions. Individual stocks should be analyzed to determine the stability of the payout rate. Stocks with very high yields may be an indication the payout will be soon reduced or eliminated. Stocks that have a history of steady or increasing distributions and good financial stability are the best choices for investors looking for high income.