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VANGUARD EMERGING MARKETS ETF $42.82 (New York symbol VWO; buy or sell through brokers) aims to track the MSCI Emerging Markets Index, which is made up of common stocks of companies located in emerging markets around the world. The fund has an MER of just 0.20%.

The fund’s top holdings are Samsung Electronics (South Korea: electronics), Petroleo Brasileiro SA (Brazil: oil and gas), Vale SA (Brazil: mining), Gazprom (Russia: gas utility), China Mobile (China: wireless), Taiwan Semiconductor (Taiwan: computer chips), America Movil SAB de CV (Latin America: wireless), China Construction Bank (China: banking), Itau Unibanco Holding SA (Brazil: banking), Industrial & Commercial Bank of China (China: banking), CNOOC Ltd. (China: oil and gas) and China Life Insurance (China: insurance).

The $68.2-billion Vanguard Emerging Markets ETF’s breakdown by country is as follows: China (17.1%), Brazil (15.4%), South Korea (14.9%), Taiwan (10.9%), South Africa (7.5%), India (7.4%), Russia (6.6%), Mexico (4.7%), Malaysia (3.4%), Indonesia (2.9%), Thailand (1.8%), Chile (1.7%), Poland (1.5%), Turkey (1.3%) and Other (0.9%).

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RIOCAN REAL ESTATE INVESTMENT TRUST $27.04 (Toronto symbol REI.UN; Units outstanding: 285.0 million; Market cap: $7.7 billion; TSINetwork Rating: Average; Dividend yield: 5.1%; www.riocan.com) has a joint venture with U.S.-based Tanger Factory Outlet Centers to build between 10 and 15 discount shopping malls in major Canadian cities.

RioCan and Tanger have now agreed to team up with privately held Orlando Corp. to build factory outlet stores on the grounds of Orlando’s Heartland Town Centre mall in Mississauga, Ontario. This could lead to similar deals to develop more of Orlando’s Toronto properties.

RioCan is still our #1 safety-conscious buy for 2012.

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H&R REAL ESTATE INVESTMENT TRUST $24.19 (Toronto symbol HR.UN; Units outstanding: 180.8 million; Market cap: $4.4 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.8%; www.hr-reit.com) owns stakes in 40 office buildings, 117 industrial properties and 133 retail properties across Canada. H&R has a 99.1% occupancy rate.

In the three months ended December 31, 2011, the REIT’s revenue rose 10.9%, to $178.2 million from $160.7 million a year earlier. Cash flow rose 10.1%, to $67.8 million from $61.6 million. Cash flow per unit fell 2.4%, to $0.40 from $0.41, on more units outstanding.

The REIT recently made two major purchases in the U.S. In October 2011, it bought Two Gotham Center in New York City for $415.5 million U.S. The newly built, 22-storey tower is leased to the City of New York for 20 years.

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CANADIAN REIT $38.74 (Toronto symbol REF.UN; Units outstanding: 67.6 million; Market cap: $2.6 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.7%; www.creit.ca) owns over 190 properties, including retail, industrial and office buildings, located across Canada and in the Chicago area. These properties contain over 24 million square feet of leasable area. Its occupancy rate is 94.4%.

In the three months ended December 31, 2011, the real estate investment trust’s revenue rose 8.9%, to $90.0 million from $82.6 million a year earlier. Cash flow per unit rose 6.9%, to $0.62 from $0.58.

The REIT bought $264.5 million of properties in 2011, including its June purchase of two fully leased malls in Mississauga, Ontario, for $174.4 million. In March 2012, it bought 50% of the 310,000- square-foot Altius Centre in Calgary for $89.9 million. In April, it paid $156.0 million for 50% of Calgary Place, a 575,000-square-foot office and retail complex, also in Calgary.

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GLOBAL X COPPER MINERS ETF $13.56 (New York symbol COPX; buy or sell through brokers; www.globalxfunds.com) tracks the Solactive Global Copper Miners Index, which includes between 20 and 40 international companies that mine, refine or explore for copper. Germany-based Structured Solutions AG created this index.

Canadian companies make up 38.1% of the fund’s holdings. It also includes companies based in the U.S. (10.7%), Australia (6.9%) and Mexico (6.2%), Global X Copper Miners ETF’s MER is 0.65%.

Its top 10 holdings are Lundin Mining Corporation at 6.8%; Xstrata plc, 6.1%; Grupo Mexico, 6.1%; Southern Copper Corporation, 5.9%, Antofagasta plc, 5.4%; First Quantum Minerals, 5.2%, Jiangxi Copper Company, 5.2%; Vedanta Resources, 5.2%; HudBay Minerals, 5.2%; and Freeport Copper, 5.1%.

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GLOBAL X SILVER MINERS ETF $20.96 (New York symbol SIL; buy or sell through brokers; www.globalxfunds.com) tracks the Solactive Global Silver Miners Index.

This index includes between 20 and 40 international companies that mine, refine or explore for silver. Germany-based Structured Solutions AG developed this index.

Canadian companies make up 45.6% of the fund’s holdings, but it also includes companies based in Mexico (14.5%) and the U.S. (9.0%). The ETF’s MER is 0.65%.

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ISHARES S&P/TSX GLOBAL GOLD INDEX FUND $19.17 (Toronto symbol XGD; buy or sell through brokers; ca.ishares.com) aims to mirror the performance of the S&P/TSX Global Gold Index.

This index is made up of 64 gold stocks from Canada and around the world. The fund’s MER is 0.55%. iShares S&P/TSX Global Gold Index Fund began trading on March 23, 2001.

The fund’s top 10 holdings are Barrick Gold at 17.0%; Goldcorp., 13.0%; Newmont Mining, 9.9%; AngloGold Ashanti (ADR), 5.5%; Yamana Gold, 4.6%; Kinross, 4.3%; Eldorado Gold, 4.2%; Gold Fields (ADR), 3.9%; Compania de Minas Buenaventura SA, 3.8%; and Randgold Resources, 3.4%.

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ISHARES FTSE/XINHUA CHINA 25 INDEX FUND $38.31 (New York symbol FXI; buy or sell through brokers) is an ETF that aims to track the FTSE/Xinhua China 25 Index, which is made up of the 25 largest and most liquid Chinese stocks. All of the stocks in the index trade on the Hong Kong exchange. Some also trade as American Depositary Receipts (ADRs) on the New York exchange.

The fund’s top holdings are China Mobile, 10.3%; China Construction Bank, 8.7%; Industrial & Commercial Bank, 7.9%; CNOOC, 6.9%; Bank of China, 6.0%; Ping An Insurance, 4.2%; Petrochina, 4.1%; China Merchants Bank, 4.1%; and China Life Insurance, 4.1%.

The fund’s holdings give it the following industry breakdown: Financials, 53.9%; Telecommunications, 18.0%; Oil and Gas, 14.8%; Basic Materials, 10.3%; and Industrials, 2.2%; The ETF has an expense ratio of 0.72%.

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ISHARES MSCI EMERGING MARKETS EASTERN EUROPE INDEX FUND $26.38 (New York symbol ESR; buy or sell through brokers), is an ETF that aims to track the MSCI Emerging Markets Eastern Europe Index. The fund’s geographic breakdown is as follows: Russia, 76.4%; Poland, 15.8%; Czech Republic, 3.9%; and Hungary, 3.5%.

The fund’s top holdings are Gazprom (Russia: gas utility), 19.7%; Lukoil (Russia: oil), 10.0%; Sberbank (Russia: bank), 8.9%; Novatek (Russia: natural gas), 3.9%; Rosneft Oil Company (Russia: oil and gas), 3.7%; Uralkali (Russia: potash), 3.4%; Mobile Tele- Systems (Russia: wireless), 3.2%; Tafneft (Russia: oil and gas), 2.8%; MMC Norilsk Nickel (Russia: mining), 2.7%; and Magnit OJSC (Russia: retailing), 2.5%. iShares MSCI Emerging Markets Eastern Europe Index Fund’s expense ratio is 0.68%.

The fund’s concentration in Russia adds risk. But the long-term outlook for resource prices, including oil, is positive. That’s a big plus for Russia’s largely resource-based economy, which is forecast to grow by 4% in 2012.

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ISHARES S&P INDIA NIFTY 50 INDEX FUND $22.40 (Nasdaq symbol INDY; buy or sell through brokers; us.ishares.com) is an ETF that aims to track the S&P CNX Nifty Index, which represents the 50 largest, most liquid Indian securities.

The fund’s top holdings are ITC Ltd. (conglomerate), 8.3%; Reliance Industries Ltd. (conglomerate), 7.8%; Infosys Technologies (software), 7.1%; Housing Development Finance, 6.2%; ICICI Bank, 6.2%; HDFC Bank, 6.1%; Larsen & Toubro Ltd. (conglomerate), 4.1%; Tata Consultancy Services (information technology), 3.8%; and State Bank of India, 3.5%.

The fund’s industry breakdown includes Banks, 19.0%; Computers, 13.0%; Refineries, 8.3%; Cigarettes, 8.3%; Automobiles, 6.6%; Housing, 6.3%; Pharmaceuticals, 4.4%; Engineering, 4.1%; Power, 3.9%; and Oil Exploration, 3.7%. The ETF has an expense ratio of 0.89%.

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TRANSCANADA CORP. $43.44 (Toronto symbol TRP; Shares outstanding: 704.2 million; Market cap: $30.6 billion; TSINetwork Rating: Above Average; Dividend yield: 4.1%; www.transcanada.com) gets 9% of its revenue from its minority stake in the Bruce nuclear power complex in central Ontario.

Two of the plant’s eight reactors have been out of service since 1995, and the company and its partners are nearly finished upgrading them. The partners plan to restart both by September 30, 2012. The plant will then supply 25% of Ontario’s power. Right now, Bruce’s six operating reactors provide 19% of the province’s electricity.

TransCanada is a buy.

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VERESEN $14.40 (Toronto symbol VSN; Shares outstanding: 193.7 million; Market cap: $2.8 billion; TSINetwork Rating: Average; Yield: 6.9%) owns pipelines, power plants and natural gas processing facilities across North America. One of its major holdings is 50% of the Alliance gas pipeline, which runs 3,000 kilometres from Fort St. John, B.C., to Chicago. Enbridge owns the other 50%.

As well, the company owns the Alberta Ethane Gathering System, and Veresen and Enbridge together own 85.4% of the Aux Sable natural gas liquids plant.

In December 2011, Veresen bought the Hythe/ Steeprock gas gathering and processing complex in the Montney region of B.C. and Alberta from Encana Corp. for $920 million. Encana has also agreed to buy most of the facility’s gas under a long-term contract.

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PEMBINA PIPELINE $29.78 (Toronto symbol PPL; Shares outstanding: 285.0 million; Market cap: $8.5 billion; TSI Network Rating: Average; Dividend yield: 5.4%; www.pembina.com) owns pipeline systems with a total length of over 7,500 kilometres. These lines pump oil and gas from fields in B.C. and Alberta to refineries, or feed into major pipelines, such as the Enbridge Pipeline System.

Pembina also owns the Syncrude, Horizon and Cheecham pipelines, which pump crude oil from the Alberta oil sands. In addition, the company holds a 50% stake in the Fort Saskatchewan Ethylene Storage Limited Partnership. It also owns the Cutbank Complex, a network of natural gas gathering and processing facilities.

In the three months ended December 31, 2011, Pembina’s cash flow rose 2.9%, to $66.8 million, or $0.40 a share, from $64.9 million, or $0.39 a share, a year earlier.

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ENCANA CORP. $20.61 (Toronto symbol ECA; Shares outstanding: 735.4 million; Market cap: $15.2 billion; TSINetwork Rating: Average; Dividend yield: 4.3%; www.encana.com) expects to earn $1.02 a share this year. However, cash flow could be as high as $4.58 a share.

Encana’s forecast 2012 cash flow is so much higher than earnings because it includes not only earnings, but also non-cash charges including depletion of its natural gas assets.

In Encana’s case, those depletion charges include writing off natural gas assets acquired at much higher prices.

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IBM $208 (New York symbol IBM; Shares outstanding: 1.2 billion; Market cap: $249.6 billion; TSINetwork Rating: Above Average; Dividend yield: 1.6%) is the world’s oldest computer company (it began operating in 1911), with operations in over 170 countries.

In the three months ended March 31, 2012, IBM earned $3.1 billion. That’s up 7.1% from $2.9 billion a year earlier. The company spent $3.0 billion on share buybacks in the latest quarter, and $15 billion in 2011. Due to fewer shares outstanding, earnings per share rose 13.0%, to $2.61 from $2.31.

Revenue rose 0.3%, to $24.7 billion from $24.6 billion. Computer hardware sales fell 6.7%, but that was offset by higher sales of software (up 5.5%) and computer services (up 0.7%).

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Tip of the week: There are a few good reasons to pay a little extra money for the right class of shares in the stocks you buy.

American Depositary Receipts make foreign investing easier and safer for individual investors. The foreign company must provide detailed financial information to U.S. regulators and to the sponsor, or depositary, bank or broker. As well, since ADRs trade on U.S. stock exchanges in U.S. dollars, you don’t have to worry about currency exchange rates, foreign stock exchange rules, or language barriers. Today we highlight one of the world’s most prominent commodity stocks, an ADR with its home base in Australia, and one that made headlines in Canada when its attempted takeover of Potash Corp. of Saskatchewan (Toronto symbol POT) was blocked by Ottawa in 2010....

Pat McKeough responds to many personal questions on specific stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. This past week, one Inner Circle member asked about dividend stocks—specifically, about a pipeline firm that is one of Canada’s remaining income funds. The company has just made a major overseas acquisition and Pat assesses the potential risk and rewards. ...

This is the latest in a series of video interviews in which Pat McKeough will give his advice on a variety of topics. Some will deal with his overall investment philosophy, others on specific investment strategies and still others will be comments on events that are affecting the markets and the economy. This time, he discusses one of the most venerable of Canadian stocks. A reader asked about CP Rail, Pat’s #1 Stock Pick for 2012, and all of the media attention it’s receiving. Shouldn’t we avoid stocks in the limelight? Not in this case, says Pat, and he explains why.
The Real News About CP Rail...

BANK OF MONTREAL $56 (www.bmo.com) has opened an office in Abu Dhabi. This will help it take advantage of rising demand for wealth management services in the United Arab Emirates. Buy.

BANK OF NOVA SCOTIA $53 (www.scotiabank.com) will get $93 million in earnings from Scotiabank Mexico, its Mexican subsidiary, in its current quarter. That’s small next to the $1.3 billion, or $1.20 a share, that Bank of Nova Scotia earned in the quarter ended January 31, 2012....

BELL ALIANT INC. $26 (www.aliant.ca) earned $0.45 a share in the three months ended March 31, 2012. That’s up 2.3% from $0.44 a year earlier. Revenue was unchanged at $682.0 million. Strong demand for high-speed Internet and TV services offset lower local and long distance revenue. Buy.

AGRIUM INC. $83 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 158.0 million; Market cap: $13.1 billion; Price-to-sales ratio: 0.8; Dividend yield: 0.5%; TSINetwork Rating: Average; www.agrium.com) makes fertilizers from natural gas. It sells its products to farmers and industrial users through its more than 1,200 stores in North America, South America and Australia. The company’s retail outlets help shield it from volatile fertilizer prices.

Agrium continues to add more stores. It recently agreed to pay $1.65 billion (all amounts except share price and market cap in U.S. dollars) for 230 outlets in western Canada operated by Viterra Inc. It will also purchase Viterra’s 17 stores in Australia, plus its 34% stake in a fertilizer plant in Alberta. Agrium will buy these businesses from Glencore International plc, which is now in the process of taking over Viterra.

Previous acquisitions boosted results

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PENGROWTH ENERGY CORP. $8.41 (Toronto symbol PGF; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 364.5 million; Market cap: $3.1 billion; Price-to sales ratio: 1.9; Dividend yield: 10.0%; TSINetwork Rating: Average; www.pengrowth.com) reported that its daily production rose 2.7% in the three months ended March 31, 2012, to 75,618 barrels of oil equivalent from 73,634 a year ago. Because of depressed natural gas prices, the company is shifting its focus to oil, which accounted for 77% of its production compared with 61% a year earlier.

Even with the higher production, weak gas prices and higher royalties cut Pengrowth’s cash flow by 22.6% in the quarter, to $113.6 million from $146.8 million a year earlier. Cash flow per share fell 31.1%, to $0.31 from $0.45, on more shares outstanding.

However, the company’s high-quality western Canadian properties and its upcoming all-stock purchase of NAL Energy (Toronto symbol NAE) should let it take better advantage of high oil prices.

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CGI GROUP INC. $21 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 258.5 million; Market cap: $5.4 billion; Price-to-sales ratio: 1.3; No dividends paid; TSINetwork Rating: Extra Risk; www.cgi.com) gets about 11% of its revenue from clients in the health care industry. The company mainly helps these customers convert patient records to electronic formats and audit Medicare and Medicaid claims in the U.S.

The company’s health-care-related revenue could suffer if the U.S. Supreme Court overturns Obamacare, as recent changes to the American health care system are known. Even so, CGI’s long-term outlook remains bright, because its services help its clients cut their costs and improve efficiency.

CGI Group is a buy.

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