Lock in 13.3% Yields by Investing in the Canadian Economic Boom

     At the center of all of this prosperity sits as much as 1 trillion barrels of oil reserves locked in Canada's vast oil sands.  Fort McMurray is at the very heart of the Canadian oil sands, the fastest-growing part of the nation's petroleum industry.

     And Canada is an absolutely crucial player in the energy market.  In fact, the nation is the United States' single largest source of imported oil -- more important to U.S. oil supply than the entire Middle East.

     Oil sands are a combination of a heavy, solid form of oil known as bitumen mixed with sand, water and dirt -- producers heat the oil sands to separate the bitumen.  After a handful of additional processing steps, bitumen can be used to make gasoline and other refined products, just like conventional crude oil.

     Oil sands are not a new resource.  Native Americans used the bitumen for centuries to waterproof their canoes, and early settlers actually burned the sands to produce heat.  But for most of the 20th century, the big oil producers ignored the oil sands -- the price of crude was simply too low and conventional oil deposits too abundant to make producing this resource economical.
 

But that's changed.      With oil prices above $100 per barrel today, the oil sands are immensely profitable for producers. And as my charts show, investment and production are booming; oil sands production currently stands at more than 1.1 million barrels per day, more than one-third of Canada's total.      By the end of 2010, oil sands production is expected to approach 2 million barrels per day, close to two-thirds of Canada's total output.  In fact, the main constraints on growth remain shortages of skilled labor and crucial equipment -- the very shortages that have resulted in high

salaries and economic boom times for Fort McMurray.

     China Looks to Tap Oil Sands

     The U.S. is the primary destination for Canadian oil exports -- currently, more than three-quarters of Canada's exports go to the nation's southern neighbor.  But other countries arealso interested in Canada's natural riches.  Chinese oil giant CNOOC made headlines in 2005 when it invested in a handful of oil sands projects.  Chinese firms have already invested a total of $300 million in Canadian oil sands plays so far, and more investment is likely in the future.  Clearly, this resource could be a valuable source of oil to fuel China's growing demand.

     And while many focus solely on the oil industry, Canada is also a crucial supplier of other natural resources.  Canada remains the number one source of natural gas imports into the U.S. market; Canadian production has been key to meeting rapid growth in U.S. demand.  And Canada also ranks as one of the world's top five producers of commodities as diverse as copper, uranium, gold, silver, zinc and lumber.  All of these resources are in high demand, particularly in fast-growing emerging markets like China and India.

     Canadian Stocks Deliver +178% Gains

     Heavy exposure to commodity-related industries has been the key driver of outperformance for the Toronto Stock Exchange (TSX) in recent years.  The TSX increased +178% from the end of 1999 through 2007, compared to just +3.7% for the S&P 500.  

     Looked at another way, a $100,000 investment in Canada back in late 1999 was worth $278,000 by the end of 2007, compared to just $103,700 for the same sized investment in the S&P 500.  And over the past two years alone, the Canadian market has outperformed the S&P 500 by better than a 3-to-1 margin.

     Meanwhile, the nation's stable economic growth continues, with the Canadian economy expected to expand at a roughly +2.5% clip in the coming year -- versus flat or possibly even negative growth in the U.S.  Even the Canadian real estate market continues to boom despite weakness in the U.S. -- according to a recent survey released by RE/MAX, Canadian real estate prices are up +98.7% over the past decade, and prices continue to move higher.  That's by far the largest property boom in Canada's history.

     Bottom line -- Canada's resilient economic growth and vast natural resource wealth should continue for many years to come, leading to outsized profits for investors.

     Currency Gains Provide Additional Boost

     And there's another kicker -- few people realize that among the world's 16 major currencies, Canada's has been one of the top performers against the U.S. dollar.  In fact, the Canadian dollar soared +19% against the dollar in 2007 -- far faster than the euro's +12% rise.  That means dividend payouts from Canadian companies also surged +19% last year for U.S. investors.

The Canadian dollar is in the middle of a long-term uptrend vs. the U.S. dollar, and I expect that uptrend to continue in the coming years.  That's great news for U.S. investors with Canadian

     Capture Dividend Yields of up to 13.3%

     Canada is an exceptional place for U.S. investors to seek attractive opportunities.  It's also a terrific source of high-yield investments.

     Thanks to the nation's booming natural resources sector, Canadian companies are now flush with cash, and they're returning a large portion of that cash to shareholders in the form of solid dividend payments.  In fact, many Canadian firms now offer enticing dividend yields of 8%, 10% . . . even 12% or more.  

     With these points in mind, I recently added several high-quality Canadian companies to my model portfolios, including an oil and gas giant that controls one of Canada's largest oil sands deposits, and pays an 11.6% dividend yield to boot.  I also featured a rock-solid Canadian energy firm that's paying even greater dividends -- dishing out a 13.3% yield.  And since those dividends are doled out in Canadian dollars, U.S. investors are likely to earn even more from their investment.

     If you'd like to learn the names of these companies -- plus receive a steady stream of foreign stocks, funds and other investing ideas with abnormally high dividend yields each and every month -- then I'd like to extend you a personal invitation to try my premium international investing newsletter . . . High-Yield International.
Visit this link to learn more.

     Thanks for joining me on my search for today's highest-yielding securities!

-- Nick Lanyi
Editor, High-Yield International