Fund Profile

Middlefield Canadian Income 22 August 2023


Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Middlefield Canadian Income. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

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Middlefield Canadian Income (MCT) offers investors exposure to Canada, an equity market often overlooked by UK investors despite the historical relationship between the two countries. Canada is a G7 economy adjacent to the US but with a very different sector make-up to its equity market, and a much stronger equity income culture, which is reflected in MCT’s yield of c.5.0% . The largest sectors in MCT’s benchmark are financials, utilities, energy, and pipelines, which gives a strong sense of the difference compared to its tech-heavy southern neighbour. MCT has exposure to all these sectors, but its most significant overweight has consistently been to Canadian REITs, with a c. 24% exposure being about four times the benchmark. Manager Dean Orrico says that REITs are trading at average discounts only seen twice before during this century and that underlying earnings have been stable or rising even as discounts have widened.

Dean has managed the trust since its launch in 2006 together with his colleague Rob Lauzon. He has been with Middlefield since 1996 and has over 35 years of investment experience. He also manages a specialist fund of REITs and is president and CEO of Middlefield Group.

MCT has a track record of stable dividends and following a post-pandemic recovery in underlying earnings, the trust’s board slightly increased the dividend in 2023, with full dividend cover now restored, giving a current yield of c. 5.0% . The trust is normally geared in the range of 15-20%, and gearing currently sits in the middle of this range. The discount is c. 14%, which is a little wider than the five-year average of 13%.

Analyst's View

MCT is sticking to its guns with its allocation to Canadian REITs for reasons that will sound familiar to UK investors. We explore this in the Portfolio section, but essentially, constrained supply and strong occupier demand have been temporarily overwhelmed by rising interest rates, leading to REITs trading on historically wide discounts. So just like in the UK, investors will need to be patient, as there’s unlikely to be a proverbial bell rung at the exact inflection point where REIT share prices start to perform. In the meantime, dividends have been held or increased. At 24% of MCT’s portfolio, we think a recovery in REIT prices is the most likely source of outperformance and discount narrowing in the near term.

MCT is also exposed to some other strong themes, notably energy, where Canada is a major exporter, with new infrastructure coming into service to accelerate that. Dean says that Canadian producers are very focussed on production efficiency, which has translated to strong dividend growth. Additionally, Canadian banks have maintained their reputation for stability, even during the recent mini-banking crisis in the US, and this remains an important sector for MCT, even at a slightly underweight position.

As we discuss in the Dividend section, MCT’s dividend increased this year as underlying earnings bounced back from the pandemic years. The yield is currently c.5.0%, which compares to c.3.7% on ten-year Canadian government bonds, and 3.5% .for the Canadian equity market, illustrating MCT’s key attraction as an equity income trust.


  • Strong recovery potential from large overweight in REITs
  • Exposure to an overlooked G7 economy with strong long-term growth trends
  • High dividend yield compared to local equities and bonds


  • Relatively high gearing for an equity income trust
  • Large exposure to fossil fuels may not suit some investors
  • Portfolio concentrated three main sectors, albeit very different to neighbouring US market
Continue to Portfolio

Fund History

19 Apr 2024 Canadian dispersion
A normalisation of returns across North American equities may prove supportive of MCT…
03 Apr 2024 Fund Analysis
MCT: stable income from an overlooked equity market…
23 Jan 2024 Canada’s time to shine
MCT’s strong dividend growth and prospective rate cuts may result in the trust’s discount tightening in the year ahead…
13 Dec 2023 On a roll
Higher energy prices, strong balance sheets, and peak rates all look supportive of MCT’s energy holdings…
20 Sep 2023 Results analysis: Middlefield Canadian Income
MCT could benefit from an end to the rate hiking cycle…
06 Sep 2023 You should be dancing…
North America should be a core part of any portfolio…
22 Aug 2023 Fund Analysis
MCT: stable income from an overlooked equity market…
17 Aug 2023 Canada: lower valuations and attractive growth - Podcast: Trust Issues #21
We speak to MCT Manager Dean Orrico about the prospects for the equity income trust...
24 May 2023 Five alternatives for income investors
Watch the presentations from our event focused on trusts delivering income via a diverse range of strategies…
18 May 2023 Middlefield Canadian Income
Dean Orrico
Rewatch this webinar from our online series in May 'Alternatives for income investors' hosted by the team at Kepler Trust Intelligence 15-19 May…
Watch Recording
17 Apr 2023 Results analysis: Middlefield Canadian Income
MCT saw positive share price returns in 2022 despite a tough macro environment…
30 Mar 2023 A new frontier for income investors
The managers of Middlefield Canadian Income think valuations and a new immigration policy put this little known destination for UK investors in an attractive position…
16 Mar 2023 Diversity matters
We examine the effect of blending multiple funds within your regional allocation and find that – while the culture wars may rumble on elsewhere – the benefits of diversity for investors are unarguable…
30 Dec 2022 They’re coming to…Canada?
Large numbers of immigrants may continue to make Canadian real estate an attractive investment…
23 Dec 2022 Catch-22
The housing market is in a strange position as we head into the new year…
30 Nov 2022 Cry havoc!
Lessons from a year in which an already troubled world was savaged by the dogs of war...
10 Nov 2022 Fund Analysis
A long track record of steady dividends and unique exposure to Canadian equity income stocks makes MCT an ideal income portfolio diversifier...
10 Nov 2022 Light at the end of the tunnel
Our speakers struck an optimistic note this week as we considered the prospects for investors at the end of a difficult year…
10 Nov 2022 Slides and Audio: Middlefield Canadian Income
Download the presentation and listen to the audio from our webinar from 9 November...
12 Oct 2022 A bright spot in North America
Canada’s economy is shielded against many of the problems the world is facing today…
21 Sep 2022 Results analysis: Middlefield Canadian Income
MCT's wide discount may prove attractive to investors...
07 Sep 2022 American muscle
Beating US indices is a monumental task. We examine the closed- and open-ended North American sectors to see how they have fared…
27 Jul 2022 Has the comeback begun?
Our analysts debate whether the market has fully priced in the current inflation and looming recession…
20 Jul 2022 Ingredients for success
We identify several less conventional trusts that offer strong sources of diversification to major indices…
24 Jun 2022 Delivering returns in a financial storm
We look at three trusts that have managed to deliver returns for shareholders so far in 2022…
27 May 2022 Canadian stocks have a lot of tailwinds in their favour
Trusts like MCT may benefit from rising prices and an economic bounce back…
12 May 2022 Fund Analysis
MCT allows investors to access a high-yielding market prospering from high commodity prices at an attractive discount…
29 Apr 2022 O Canada
The North American market may act as a safe haven for investors in the near future…
27 Apr 2022 Finding value in a haystack
Non-income value strategies are becoming increasingly scarce, but the holdouts represent attractive near-term opportunities…
View all

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