(FORTUNE Magazine) – For U.S. investors a trip to Canada now promises more than just great skiing, unspoiled wilderness, and a chance to bone up on your French. It also means access to perhaps the hottest trend in income investments. With the price of oil sky-high, a growing number of Canadian petroleum companies--typically drillers that are past their production peak but still pumping out plenty of cash --are converting into energy trusts. According to the Toronto Stock Exchange, the market cap of these companies has doubled since 2002, to $33.6 billion. Why? Like REITs, the trusts avoid corporate income taxes in exchange for paying out most of their cash flow directly to investors. That means double-digit yields. Even better, because of a favorable confluence of tax laws--U.S. investors pay taxes only on a portion of the payout, then receive a 15% international credit on their next tax return--the distribution can be essentially tax-free.

The biggest risk is that the value of the trusts is tightly tied to energy prices. And the price of oil has been slipping back from its record highs. But if you believe, as many experts do, that it will stabilize above its historical average (at, say, $35 a barrel), then buying in to a trust now makes sense, says BMO Nesbitt Burns analyst Gordon Tait.

It's important to choose a trust that has adequate reserves to support its short-term cash flow as well as an acquisition plan to extend it. One that fits that bill and trades on the NYSE is Enerplus (ERF, $30), which is a "core trust holding with great assets," according to Russell Lucas, a principal at New Jersey--based Lucas Capital. Enerplus, currently yielding 11%, recently completed a $466 million acquisition from ChevronTexaco that should increase production by 5%. Two-year-old Harvest Energy (TSX: HTE.UN, $18) is not as well known among investors and trades only in Toronto. But the company doubled its cash flow last year, and this year it's been busy snapping up oil rights.

For a more cautious play on the trusts, Raymond James analyst Don Short suggests investing in convertible debentures. It means forfeiting the tax break. But investors can still lock in a 7% to 9% interest rate (double the current rate for ten-year Treasuries). And if the unit price of the trust rises sharply, you can cash in and take the profit. --Abrahm Lustgarten