Be wary of Gaz Metropolitain

Gaz Metropolitain (TSX:GZM.UN) is one of the largest income trusts in Canada. Recently it was trading in the $20 range with a yield of 6.75% on an annual distribution of $1.36.

For investors seeking income stability, it ranks near the top of the list. Standard and Poor’s Canada gives it an SR-1 rating, the highest they have to offer.

Nonetheless, many brokers won’t recommend it to non-Quebec residents. Reason: you have to file a Quebec tax return if the units are held in a non-registered account. It’s one of those bureaucratic idiosyncrasies that most people are unaware of.

However, if you’re looking for an income vehicle for a RRIF, this one is worth considering and the Quebec tax people won’t come after you.

Adapted from an article that originally appeared in The MoneyLetter, published by MPL Communications. For subscription information, call 1-800-804-8846.