Fording Canadian Coal Trust Pays a High Cash Distribution But Beware

Fording Canadian Coal Trust (FDG), a Canadian royalty trust, is at a crossroads. Demand for its metallurgical coal (used in steel production) is high, but a strong Canadian dollar and lower coal prices have hurt its operating margins. FDG cut its Q4 cash distribution to CDN$0.53, a yield of 5.49 percent.

And there is a cloud over of Canadian royalty trusts because of the pending changes in the taxable status of such trusts in 2011.

Recently FDG said that it was looking into "strategic options", which means that it may be putting itself up for sale.

Its stock price has been quite volatile, speaking to the trust's uncertain future.

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Posted December 23, 2007.