Another Look at New Flyer Industries

New Flyer Industries (NFI-UN - Dividend Yield 12.97%) is one of my largest single clean energy investments. The company describes itself as the "leader in the heavy-duty bus market for the US and Canada. New Flyer Industries is  a company likely to benefit from peak oil. Both a trend towards urbanization, and unaffordable suburban commutes should favor bus transit.  While rail transit is more efficient and more pleasant, it takes years to build out rail transit.  Bus transit only requires the purchase of busses, and perhaps some repainting of roads and other minor changes to improve bus speed by giving them preferential right-of way. Since the company pays a large combined dividend/interest payment, I've been happy with the overall results of my investment.  The Payout Ratio since the IPO have average less than 80% and distributions have been paid for 66 consecutive months.

New Flyer's structure is unusual, with cash flows and payments to holders of "Income Deposit Securities" or IDSs.  Each IDSs is composed of a common share of New Flyer Industries, Inc., an Ontario Corporation, and C$5.53 principal amount of subordinated notes of "NFI ULC" an Alberta unlimited liability corporation.  All dividends paid by NFI to Canadian residents on the common shares after December 31, 2005 are designated as "eligible dividends" for purposes of the enhanced dividend tax credit rules contained in the Income Tax Act (Canada) and any corresponding provincial and territorial tax legislation.