Should I buy Canadian Oil Sands for my TFSA?

I’ve started getting itchy to make a new purchase for my TFSA again.  I have a bit of cash sitting in my Questrade account, and damn it… it’s not making me money!

Right now, my TFSA holdings consist of:

BMO.TO – 57%

RSI.TO – 15%

SLF.TO – 28%

BMO and Sunlife are both very high right now, which makes me reluctant to add more shares.  Rogers Sugar is basically flat and I have enough shares to DRIP two shares per quarter already.  I’m not expecting the share price on it to increase much, so I’m not inclined to buy more.  Instead, I am thinking of getting something new.

COS logo

Earlier this year, I considered buying Encana for my TFSA portfolio.  I decided against it in the end.  The natural gas sector seemed a bit iffy and the yield at the time was not enough to tempt me.  I’m still interested in adding some companies in the energy sector to my portfolio though and Canadian Oil Sands Ltd (COS.TO) was one of the companies that I’m looking at.

COS.TO is a Canadian company which generates income from the Alberta oil sands through its 36.74% interest in the Syncrude Project. The Syncrude Project holds oil sands mines, utilities plants, bitumen extraction plants and an upgrading complex that turns bitumen into SCO, all located near Fort McMurray, Alberta.  It is the second largest partner in the Syncrude oil sands mine.

At recent prices, the dividend yield has been a crazy 6-7%.  I want that!  With oil reserves around the world steadily depleting, I think oil sands are a good alternative for fuel-hungry populations.  It’s just a matter of when the tipping point is – extracting oil in this way is more expensive.

Of course, there are also ethical considerations.  Oil sands are controversial – extracting the usable product from oil sands requires a lot of water and releases massive amounts of pollutants into the air.  While progress has been made in terms of minimizing health and environmental impact, there is no clear consensus regarding the safe management of oil sands.

So what do you guys think – buy it or leave it?  Does anyone own and COS.TO?

Posted in: Money

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