Canadian Royalty Trust - CANROY

DEFINITION of 'Canadian Royalty Trust - CANROY'

An oil, gas or mineral company that is organized as a trust rather than as a traditional corporation. The CANROY does not physically operate the oil, gas or mineral assets; operational activities are run by outside parties.


Because they are organized as a trust, Canadian Royalty Trusts initially were not taxed at the corporate tax rate. This allowed a CANROY to save more cash, which it used to pay a larger-than-average dividend to its investors. The Canadian government changed its tax policy.




BREAKING DOWN 'Canadian Royalty Trust - CANROY'

Investing in a royalty trust such as a CANROY allows the investor to gain exposure to the energy industry without having limited exposure to a certain company's operations. Because the primary draw of a CANROY is that it pays a high dividend, investors can experience higher volatility and risk when interest rates or oil prices change.


Royalty trusts tend to involve older mines and wells, meaning that the productivity of these assets is on the decline, and thus income from the trust declines over time unless more assets are purchased. Unlike royalty trusts in the United States, CANROYs may be actively managed and can acquire new properties (U.S. trusts have to stick to their original properties), allowing them to theoretically keep income levels stable.

RELATED TERMS
  1. Royalty Units

    An ownership unit in a royalty trust. A royalty unit gives the ...
  2. Energy Trust

    A type of corporation which exists solely to hold oil and gas ...
  3. Trust Fund

    A trust fund is a fund comprised of a variety of assets intended ...
  4. Royalty

    A payment to an owner for the use of property, especially patents, ...
  5. Credit Shelter Trust - CST

    A type of trust that allows a married investor to avoid estate ...
  6. Income Trust

    An investment trust that holds income-producing assets and trades ...
Related Articles
  1. Markets

    An Introduction To Canadian Income Trusts

    Yields in excess of 10% aren't rare, but these unique investments need to be chosen very carefully.
  2. Retirement

    Should You Put Your Faith In A Trust?

    Many institutions want a piece of your portfolio, but trusts can provide a one-stop shop.
  3. Retirement

    How To Set Up A Trust Fund In Australia

    No, they're not just for the super-rich. But you need to know the rules.
  4. Retirement

    Surprising Ways a Trust Could Help Your Family

    Everything you always wanted to know about setting up trusts, in handy glossary form.
  5. Retirement

    How To Set Up A Trust Fund In The U.K.

    A guide to the whys and wherefores of setting up this most versatile of estate-planning instruments in the United Kingdom.
  6. Financial Advisor

    Advisors: Tips for When to Employ Living Trusts

    Revocable living trusts accomplish estate planning objectives that aren't possible with a will. Here are some of the cases that show when to use a trust.
  7. Retirement

    Establishing A Revocable Living Trust

    This arrangement allows you to have more control over your estate - both before and after your death.
  8. Managing Wealth

    Surprising Uses for Trust Funds

    Here are five common situations where a trust fund makes financial sense.
  9. Retirement

    Pick The Perfect Trust

    Trusts are an estate plan's anchor, but the terminology can be confusing. We cut through the clutter.
  10. Managing Wealth

    Advanced Estate Planning: Using Trusts

    By Steven Merkel While making a will is one of the most important documents in estate planning, there are typically always a few items, property, or accounts that while they're included in your ...
RELATED FAQS
  1. What percentage of withdrawals from a trust fund is taxed?

    I have an inherited a trust fund. This is the first time I have considered pulling money from the account.  ... Read Answer >>
  2. What is the difference between a royalty trust and a master limited partnership?

    Find high-yield opportunities in natural resources through royalty income trusts or master limited partnerships, and learn ... Read Answer >>
  3. Will I have to pay taxes every year when I receive the $25,000 from my trust fund?

    My inheritance is in the form of a trust fund that distributes $25,000 per year for 10 years. ... Read Answer >>
  4. If I place money in a trust, is it taxable?

  5. I am trying to form a living trust, will the trust help me avoid income tax?

    I am 78 years old, can I put all of my properties in the trust?   ... Read Answer >>
  6. Can a corporation deduct dividend payments to shareholders before taxes are calculated?

    Corporations may not legally deduct the dividend payments before taxes but there is another approach - a corporate structure ... Read Answer >>
Hot Definitions
  1. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  2. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  3. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  4. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  5. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
  6. Enterprise Value (EV)

    A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is ...
Trading Center