Dividend reinvestment plans, or DRIPs, let shareholders reinvest dividends to buy additional shares (or fractions of shares) of the company. DRIPs bypass brokers, so shareholders save on commissions.

DRIPs also eliminate the nuisance of depositing or reinvesting small cash dividend cheques. As well, many DRIPs allow optional commission-free share purchases on a monthly or quarterly basis.

(Dividend reinvestment plans are just …read more »

Canadian Pacific Railway (symbol CP on Toronto) has long been a cornerstone of the Canadian economy.

CP was incorporated on February 16, 1881. The company began cross-Canada train service after the rail link to the Pacific coast was famously completed with the driving of the “last spike” at Craigellachie, British Columbia, on November 7, 1885.

Prime Minister John A. MacDonald’s government …read more »

Investors generally look to aggressive stocks for capital gains and to more conservative stocks, like utilities, for income. However, there are some aggressive stocks that pay dividends that are as high — or even higher — than more established companies.

(We’ve updated our buy/sell/hold advice on a high-dividend aggressive stock in a just-published issue of Stock Pickers Digest. See below …read more »

CANADIAN UTILITIES LTD. (Toronto symbols CU (class A non-voting) $47 and CU.X (class B voting) $47; Income Portfolio, Utilities sector; Shares outstanding: 125.9 million; Market cap: $5.9 billion; Price-to-sales ratio: 2.2; Dividend yield: 3.2%; SI Rating: Above Average) distributes electricity and natural gas in Alberta. It also operates 19 power plants: 15 in Canada, two in the U.K., and two …read more »

EMERA INC. $24 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 113.0 million; Market cap: $2.7 billion; Price-to-sales ratio: 1.8; Dividend yield: 4.7%; SI Rating: Average) owns Nova Scotia Power Inc., which is Nova Scotia’s main electrical-power supplier. Nova Scotia Power supplies 94% of Emera’s revenue. The remaining 6% comes from investments in power companies in the U.S. and …read more »

ATCO LTD. (Toronto symbols ACO.X (class I
non-voting) $50 and ACO.Y (class II voting) $51; Income Portfolio, Utilities sector; Shares outstanding: 58.2 million; Market cap: $2.9 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.1%; SI Rating: Above Average) is a holding company. Its main subsidiary is 52.3%-owned Canadian Utilities.

ATCO recently reorganized its operations into three main divisions: Utilities (which distributes electricity and …read more »

Utility stocks have more appeal than they used to, mainly because low interest rates have made bonds less appealing. (See later in this issue for our full analysis of why utilities are a better choice than bonds for your portfolio.)

We see all five of these electrical-power utilities as buys. That’s because they offer an attractive mix of safety, income and …read more »

Income stocks have more appeal than they used to, mainly because today’s low interest rates have cut the yields of bonds and other fixed-return investments.

But even if you don’t need current income from your portfolio, you still may want to invest in income stocks. That’s because these stocks offer a measure of safety and security. Dividends, after all, are …read more »

FPL GROUP INC. $47 has raised its quarterly dividend by 5.8%, to $0.50 a share from $0.4725. The new annual rate of $2.00 yields 4.3%. Florida power regulators recently rejected most of the rate hikes that the company requested for 2010. However, FPL gets just over half of its earnings from its non-regulated businesses, such as its NextEra Energy Resources …read more »

We think investors will profit most — and with the least risk — by buying shares of well-established, dividend-paying stocks with strong business prospects.

These are companies that have strong positions in healthy industries. They also have strong management that will make the right moves to remain competitive in a changing marketplace.

Here are 3 ways dividend paying stocks can help …read more »

BELL ALIANT REGIONAL COMMUNICATIONS INCOME FUND $25 (Toronto symbol BA.UN; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 228.4 million; Market cap: $5.7 billion; Price-to-sales ratio: 1.8; Dividend yield: 11.6%; SI Rating: Above Average) provides telephone services in Atlantic Canada, as well as rural parts of Ontario and Quebec.

As part of the deal that created the trust in 2006, Bell Aliant …read more »

TELUS CORP. (Toronto symbols T $33 and T.A $32; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 318.0 million; Market cap: $10.5 billion; Price-to-sales ratio: 1.1; Dividend yield: 5.8%; SI Rating: Above Average) provides telephone services in British Columbia, Alberta and eastern Quebec. It also sells wireless services through a nationwide network.

The company expects its revenue to rise by 2% to …read more »

ATCO LTD. $45 has increased its quarterly dividend by 6.0%, to $0.265 a share from $0.25. The new annual rate of $1.06 yields 2.4%. Buy.

CANADIAN UTILITIES LTD. $42 is 52% owned by ATCO, and is ATCO’s main subsidiary. Like its parent, Canadian Utilities is raising its dividend. The new quarterly payment is $0.3775 a share. That’s up 7.1% from $0.3525. …read more »

ISHARES CDN BOND INDEX FUND $29.67 (CWA Rating: Income) (Toronto symbol XBB; buy or sell through a broker) mirrors the performance of the DEX Universe Bond Index.

This index consists of a wide range of investment-grade Canadian government and corporate bonds with terms to maturity of more than one year. The 301 bonds in the portfolio have an average term to …read more »

ISHARES CDN SHORT BOND INDEX FUND $29.35 (CWA Rating: Income) (Toronto symbol XSB; buy or sell through a broker) mirrors the performance of the DEX Short-Term Bond Index.

This index consists of a wide range of investment-grade federal, provincial, municipal and corporate bonds with between one- and five-year terms to maturity. The fund currently holds 183 bonds with an average term …read more »

We generally advise against investing in bonds right now, because today’s low interest rates make them unattractive. That’s especially so in light of the potential rise in inflation that may follow the heavy deficit spending and rapid expansion of the money supply that is now underway.

However, if you need stable income and want to hold bonds, here are two bond …read more »

CEDAR FAIR L.P. $13 (New York symbol FUN; Income Portfolio, Consumer sector; Units outstanding: 55.2 million; Market cap: $717.6 million; Price-to-sales ratio: 0.8; No dividends paid since November 2009; WSSF Rating: Average) owns 11 amusement parks and seven water parks, mostly in the midwestern and northeastern U.S. It recently accepted an $11.50-a-unit takeover offer from Apollo Global Management, a private-equity …read more »

MANITOBA TELECOM SERVICES $34.38 (Toronto symbol MBT; Shares outstanding: 64.7 million; Market cap: $2.2 billion; SI Rating: Average) has issued $200 million of new 10-year bonds, yielding 5.625%.

The company will probably use part of the cash to help pay for a new high-speed wireless network that it is building in Manitoba in partnership with Rogers Communications Inc. (Toronto symbol RCI.B). …read more »

We analyze a wide range of investments in Canadian Wealth Advisor, our newsletter for safety-conscious investors. These include the 19 common stocks we’ve selected for our “Safety-Conscious Stock Portfolio.”

All these stocks are well-established companies with bright prospects and strong positions in healthy industries. As well, almost all offer dividend reinvestment plans, or DRIPs.

DRIPs let shareholders reinvest dividends to …read more »

ALLIANT ENERGY CORP. $31 (New York symbol LNT; Income Portfolio, Utilities sector; Shares outstanding: 110.6 million; Market cap: $3.4 billion; Price-to-sales ratio: 1.0; Dividend yield: 4.8%; WSSF Rating: Average) sells electricity and natural gas to 1.4 million customers in Wisconsin, Iowa, Minnesota and Illinois.

In the three months ended September 30, 2009, Alliant lost $43.3 million, or $0.39 a share. However, …read more »

AMEREN CORP. $28 (New York symbol AEE; Income Portfolio, Utilities sector; Shares outstanding: 236.9 million; Market cap: $6.6 billion; Price-to-sales ratio: 0.8; Dividend yield: 5.5%; WSSF Rating: Average) sells electricity and natural gas to 3.4 million customers in Illinois and Missouri.

In the third quarter of 2009, Ameren’s earnings rose 3.7%, to $255 million from $246 million a year earlier. However, …read more »

Today’s cautious investors have developed a renewed interest in dividends and dividend yields.

Dividends are more dependable than capital gains, especially in a volatile market. In fact, dividends may provide up to a third of an investor’s long-term return. Recent tax cuts also mean that you pay roughly the same tax on dividend income and capital gains.

At the same time, newspapers …read more »

BUCKEYE PARTNERS L.P. $54 (New York symbol BPL; Income Portfolio, Utilities sector; Units outstanding: 51.4 million; Market cap: $2.8 billion; Price-to-sales ratio: 1.6; Dividend yield: 6.9%; WSSF Rating: Average) operates over 8,700 kilometres of pipelines in the northeastern and midwestern U.S. that pump gasoline, jet fuel and other petroleum products. The partnership also operates 3,900 kilometres of pipelines on behalf …read more »

The recession and the slow pace of the recovery have hurt demand for electrical power at these two midwestern utilities. However, regulators will probably let them raise their rates to cover some of the shortfall. That should help them maintain their dividends and replace aging power plants. Still, we see only Alliant as a buy right now.

AMEREN CORP. $28 (New …read more »

Many Stock Pickers Digest recommendations pay no dividends. But some do provide significant income, along with capital-gains possibilities. In fact, dividends may generate up to a third of your long-term return.

That’s why we now post the dividend yield (dividend rate divided by share price) in the basic information we present for each company we analyze.

We’ll also tell you if a …read more »

Investors are paying more attention to dividend yields (a company’s total annual dividends paid per share divided by the current stock price) as volatile stock markets continue to recover. Companies are responding by doing their best to maintain, or even increase, their dividend payments.

That’s good news for investors, because dividends are more dependable than capital gains as a source of …read more »

QUAKER CHEMICAL CORP. $21 (New York symbol KWR; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 11.1 million; Market cap: $233.1 million; Price-to-sales ratio: 0.5; WSSF Rating: Average) makes lubricants and chemicals that keep mechanical parts from corroding. Weaker demand from carmakers recently prompted Quaker to cut 10% of its workforce. These savings helped the company earn $0.45 a share …read more »

WINDSTREAM CORP. $10 will buy Iowa Telecommunications Services Inc. (New York symbol IWA), which sells telephone services in rural areas of Iowa and Minnesota. This is Windstream’s fourth major purchase this year. If you include its previous deals for two rural phone companies and a firm that sells Internet services to businesses, Windstream is paying a total of $2.2 billion …read more »

TELUS CORP. (Toronto symbols T $33 and T.A $31; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 318 million; Market cap: $10.2 billion; Price-to-sales ratio: 1.1; SI Rating: Above Average) earned $280 million in the three months ended September 30, 2009. That’s down 2.1% from $286 million a year earlier. Earnings per share fell 1.1%, to $0.88 from $0.89, on …read more »

ANDREW PELLER LTD. $8.36 (Toronto symbol ADW.A; Income Portfolio, Consumer sector; Shares outstanding: 14.9 million; Market cap: $124.6 million; Price-to-sales ratio: 0.5; SI Rating: Above Average) will sell its Granville Island craft-brewing subsidiary to Molson Coors Canada for an undisclosed sum. The sale will close in early 2010, and will let Peller focus on its main business — its wineries …read more »

MOLSON COORS CANADA INC. $49 continues to benefit from the cost savings generated by last year’s merger of its U.S. brewing operations with those of SABMiller. These savings should continue to help Molson Coors increase its earnings in the face of weak beer sales. Best Buy.

BELL ALIANT REGIONAL COMMUNICATIONS INCOME FUND $27 is closing most of its 16 customer-support call …read more »

You’ll find our mutual-fund ratings (Aggressive, Conservative or Income) displayed next to every fund we recommend in our Canadian Wealth Advisor newsletter. They’re key to helping us find top-performing funds, including those that are suitable for income investing.

(To show you how our system works, we’d like to share one of the income investing fund buys we recently recommended in …read more »

CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $39 and CU.X [class B voting] $39; Income Portfolio, Utilities sector; Shares outstanding: 125.6 million; Market cap: $4.9 billion; Price-to-sales ratio: 1.8; SI Rating: Above Average) distributes electricity and natural gas in Alberta. It also operates power plants in other parts of Canada, and in the U.K. and Australia.

In August, Canadian …read more »

GUARDIAN MONTHLY HIGH INCOME II FUND $10.66 (CWA Rating: Income) (GGOF
Guardian Group of Funds, Commerce Court West, Suite 4100, P.O. Box 201, Toronto, Ontario M5L 1E8. 1-800-668-5613; Web site: www.ggof.com. Available from brokers) continues to emphasize more stable real estate investment trusts (REITs) and high-quality, long-lived resource trusts that pay out a low percentage of cash flow as distributions. This …read more »

CONAGRA FOODS INC. $22 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 443.1 million; Market cap: $9.7 billion; Price-to-sales ratio: 0.8; WSSF Rating: Above Average) has sold most of its fresh-food and animal-feed businesses over the past few years to focus on its more profitable packaged-food operations. ConAgra’s major brands include Chef Boyardee pasta, Hunt’s ketchup and Peter …read more »

WINDSTREAM CORP. $9.62 (New York symbol WIN; Income Portfolio, Utilities sector; Shares outstanding: 436.7 million; Market cap: $4.2 billion; Price-to-sales ratio: 1.4; WSSF Rating: Average) will buy privately held Lexcom Inc., which sells telephone and cable services to over 23,000 customers in Lexington, North Carolina. The deal should close by the end of the year.

Windstream will pay $141 million for …read more »

RIOCAN REAL ESTATE INVESTMENT TRUST $17 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 234.2 million; Market cap: $4 billion; Price-to-sales ratio: 5.4; SI Rating: Average) is Canada’s largest real-estate income trust, with properties in all 10 provinces. RioCan specializes in big-box outdoor malls, and owns 247 retail properties, 13 of which are under development. Most …read more »

3M COMPANY $71 earned $1.20 a share in the three months ended June 30, 2009, down 13.7% from $1.39 a year earlier. These figures exclude costs related to 3M’s cost-control plan, including layoffs and early-retirement offers. 3M makes over 50,000 industrial and consumer products, and the recession caused sales to fall by 15.1%, to $5.7 billion from $6.7 billion. Despite …read more »

Lowering the costs of investing has an immediate, obvious benefit: it leaves you with more money. But some cost-cutting investment techniques can wind up costing you money in the long run.

For instance, participating in dividend reinvestment plans, or DRIPs, is a good idea if you only use it to cut commission costs on stocks you would have bought anyway.

It …read more »

ATCO LTD. (Toronto symbols ACO.X (class I non-voting) $38 and ACO.Y (class II voting) $39; Income Portfolio, Utilities sector; Shares outstanding: 57.9 million; Market cap: $2.2 billion; Price-to-sales ratio: 0.7; SI Rating: Above Average) is a Calgary-based holding company. ATCO’s main subsidiary is 52.3%-owned Canadian Utilities Ltd.. This business distributes natural gas and electricity in Alberta. It also operates …read more »

Holding companies give investors the choice of buying the parent company or its publicly traded subsidiaries. In many cases, we like some subsidiaries but not others, so we prefer to invest in them directly and avoid the parent.

Each situation is different, of course, and sometimes we recommend the parent over the subsidiaries. A good example is Maple Leaf Foods. Another …read more »

CANADIAN UTILITIES LTD. (Toronto symbols CU (class A non-voting) $37 and CU.X (class B voting) $36; Income Portfolio, Utilities sector; Shares outstanding: 125.6 million; Market cap: $4.6 billion; Price-to-sales ratio: 1.7; SI Rating: Above Average) earned $73.5 million, or $0.59 a share, in the three months ended June 30, 2009. That’s a 3.8% rise from the $70.8 million, or $0.56 …read more »

ANDREW PELLER LTD. $7.90 (Toronto symbol ADW.A; Income Portfolio, Consumer sector; Shares outstanding: 14.9 million; Market cap: $117.7 million; Price-to-sales ratio: 0.4; SI Rating: Above Average) reported that its sales in its first fiscal quarter, which ended June 30, 2009, rose 13.8%, to $70.2 million from $61.6 million a year earlier. The gain was mainly because of last year’s purchases …read more »

The dividend yield of the S&P/TSX Composite Index is now around 3%, up from 1% in the early part of this decade. This rise is partly because more companies are using their excess cash for dividends instead of buying back shares.

This new focus on dividends is a good thing for investors. Dividends can contribute up to a third of …read more »

IMPERIAL OIL LTD. $40 earned $0.25 a share in the three
months ended June 30, 2009. That’s down 80.5% from $1.28 a
year earlier. The drop was mainly caused by falling crude-oil and
natural-gas prices. As well, its Cold Lake and 25%-owned
Syncrude oil-sands projects were closed for maintenance during
the quarter, which added to its costs. However, oil prices have
more than doubled since last …read more »

ABERDEEN ASIA-PACIFIC INCOME $5.90 (Toronto symbol FAP; Shares outstanding: 52.6 million; Market cap: $304.3 million; CWA Rating: Income) is a closed-end fund that mainly invests in Australian debt instruments. It also holds U.S.-dollar-denominated Asian and Latin American bonds, and bonds denominated in the currencies of countries from these regions. Right now, it has 24.6% of its assets in Asian and …read more »

One of the most concrete things about an investment is its dividend yield — the percentage you get when you divide its current yearly dividend payment by its price. It’s an indicator we pay especially close attention to when we select stocks to recommend in our Canadian Wealth Advisor newsletter.

But yield, high yield especially, can give you a false sense …read more »

ISHARES DIVIDEND INDEX FUND $16.92 (Toronto symbol XDV; buy or sell through a broker) currently holds the 30 highest yielding Canadian stocks. Stocks are included in the index based on their dividend growth, yield and average payout ratio.

The weight of any one stock in the fund is limited to 10% of the fund’s assets. iShares Dividend Index Fund’s MER is …read more »

J.P. MORGAN CHASE & CO. $33 (New York symbol JPM; Income Portfolio, Finance sector; Shares outstanding: 3.8 billion; Market cap: $125.4 billion; Price-to-sales ratio: 1.8; WSSF Rating: Average) has bought back the $25 billion in preferred shares that it sold to the U.S. Treasury under the Troubled Asset Relief Program (TARP) last year.

The bank expects to record a $1.1-billion charge …read more »

H.J. HEINZ CO. $35 (New York symbol HNZ; Income Portfolio, Consumer sector; Shares outstanding: 315 million; Market cap: $11 billion; Price-to-sales ratio: 1.1; WSSF Rating: Above Average) is a leading maker of condiments. Its flagship product, Heinz Ketchup, makes up about 60% of all ketchup sold in the U.S. Heinz also makes frozen potatoes (under the Ore-Ida brand), pasta sauces …read more »