BCE Inc.

ISHARES S&P/TSX 60 INDEX ETF $21.18 (Toronto symbol XIU; buy or sell through brokers; ca.ishares.com) is a good low-fee way to buy the top stocks on the TSX. The units are made up of stocks that represent the S&P/TSX 60 Index, which consists of the 60 largest, most heavily traded stocks on the exchange. Expenses are just 0.18% of assets, and it yields 3.0%.

The index mostly consists of high-quality companies. However, it must ensure that all sectors are represented, so it holds a few we wouldn’t include. The index’s top holdings are Royal Bank, 7.9%; TD Bank, 7.1%; Valeant Pharmaceuticals, 6.6%; Bank of Nova Scotia, 5.6%; CN Railway, 4.2%; Suncor Energy, 3.6%; Enbridge, 3.6%; Bank of Montreal, 3.4%; BCE, 3.3%; Manulife Financial, 3.3%; Brookfield Asset Management, 2.8%; and Canadian Natural Resources, 2.6%.

iShares S&P/TSX 60 Index ETF is a buy.
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BCE INC. $52.91 (Toronto symbol BCE; Shares outstanding: 847.9 million; Market cap: $45.4 billion; TSINetwork Rating: Above Average; Dividend yield: 4.9%; www.bce.ca) continues to expand its Fibe TV and high-speed Internet networks.

BCE aims to increase Fibe speeds in Toronto to 1,000 megabits a second, or 5.7 times faster than its current top speed of 175 megabits. Faster networks will help BCE hang on to its current customers and compete with cable companies.

The company will spend $1.14 billion on these improvements, which will eventually reach 1.1 million Toronto homes and businesses. It will also speed up its Fibe networks in other cities in Ontario, Quebec and Atlantic Canada.

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Like Telus (see page 71), BCE and Manitoba Telecom are speeding up their networks to profit from demand for faster downloads—both through high-speed Internet and wirelessly. Both companies can easily afford to make these investments and maintain their dividends, but we feel BCE is the better choice right now. BCE INC. $55 (Toronto symbol BCE; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 841.9 million; Market cap: $46.3 billion; Price-to-sales ratio: 2.2; Dividend yield: 4.7%; TSINetwork Rating: Above Average; www.bce.ca) is Canada’s largest telephone provider, with 7.0 million customers in Ontario, Quebec and the Atlantic provinces. It also has 3.3 million highspeed Internet users and 2.7 million TV subscribers....

BCE INC. $52.91 (Toronto symbol BCE; Shares outstanding: 847.9 million; Market cap: $45.4 billion; TSINetwork Rating: Above Average; Dividend yield: 4.9%; www.bce.ca) continues to expand its Fibe TV and high-speed Internet networks. BCE aims to increase Fibe speeds in Toronto to 1,000 megabits a second, or 5.7 times faster than its current top speed of 175 megabits. Faster networks will help BCE hang on to its current customers and compete with cable companies. The company will spend $1.14 billion on these improvements, which will eventually reach 1.1 million Toronto homes and businesses. It will also speed up its Fibe networks in other cities in Ontario, Quebec and Atlantic Canada....

Exchange traded funds (ETFs) are set up to mirror the performance of a stock market index or sub-index. They hold a more or less fixed selection of securities that represent the holdings that go into the calculation of the index or sub-index. ETFs trade on stock exchanges, just like stocks. That’s different from mutual funds, which you can only buy at the end of the day at a price that reflects the fund’s value at the close of trading. Prices of ETFs are quoted in newspaper stock tables and online. You pay brokerage commissions to buy and sell them, but their low management fees give them a cost advantage over most mutual funds....

POTASH CORP. OF SASKATCHEWAN, $38.61, Toronto symbol POT, has offered to buy German fertilizer producer K+S AG for $8 billion U.S. That’s equal to 31% of its $32.2-billion (Canadian) market cap. The company sells most of its products to customers in the U.S. and Asia, so a takeover would greatly expand its presence in Europe. It would also gain access to K+S’s new Legacy potash mine in Saskatchewan, which will open in 2016. Merging Legacy’s operations with its five existing mines in Saskatchewan would give Potash Corp. an opportunity to cut costs. K+S will probably reject the offer, so Potash Corp. may have to raise its bid....

CANADIAN PACIFIC RAILWAY LTD. $208.00 (Toronto symbol CP; Shares outstanding: 164.0 million; Market cap: $34.0 billion; TSINetwork Rating: Average; Dividend yield: 0.7%; www.cpr.ca) fell recently in response to Teck Resources’ decision to shut down its six Western Canadian coal mines for about three weeks in the third quarter of 2015. The company is closing the mines because China’s slowing economic growth has hurt sales to steelmakers, while Australia’s rising coal production has depressed prices. CP has an exclusive contract to ship coal from five of Teck’s southeastern B.C. mines to the Port of Vancouver. In the first quarter of 2015, coal shipments from Teck and other miners accounted for 10% of the railroad’s revenue. The company is aggressively cutting costs and improving efficiency. Its plans include speeding up trains and reducing the amount of time they spend at terminals. These moves should help CP offset the lost revenue....

BOMBARDIER INC., Toronto symbols BBD.A $2.52 and BBD.B $2.47, plans to cut production of its Global 5000 and 6000 business jets. That’s partly because economic sanctions have hurt sales in Russia. Demand has also weakened in China and Latin America. The company will replace these planes with newer, larger versions called the Global 7000 and 8000 in 2016 and 2017. That will help it compete with new models from Gulfstream Aerospace and Dassault Aviation. As a result, Bombardier will lay off 1,800 employees (about 3% of its workforce) at its plants in Toronto, Montreal and Belfast, Northern Ireland. It didn’t say how much it expects to pay in severance and other costs....

BCE INC. $54.15 (Toronto symbol BCE; Shares outstanding: 841.9 million; Market cap: $45.6 billion; TSINetwork Rating: Above Average; Dividend yield: 4.8%; www.bce.ca) is Canada’s largest provider of telephone, Internet and wireless services. It also offers satellite and Internet TV across the country.

In the three months ended March 31, 2015, BCE’s earnings per share rose 3.7%, to $0.84 from $0.81 a year earlier. Revenue increased 2.8%, to $5.2 billion from $5.1 billion.

Revenue from wireless services (30% of the total) rose 9.7% as the company’s network upgrades continue to attract new subscribers. It’s also gaining from rising use of smartphones, for which it charges higher service fees than regular cellphones.

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CANADIAN TIRE CORP., $133.55, Toronto symbol CTC.A, recently sold 20% of its financial services division to Bank of Nova Scotia (Toronto symbol BNS) for $500 million. That’s the main reason why the company’s earnings fell 3.0% in the quarter ended April 4, 2015, to $68.5 million from $70.6 million a year earlier. Per-share profits were unchanged at $0.88 on fewer shares outstanding, but that beat the consensus estimate of $0.87. Overall sales fell 2.3%, to $2.5 billion from $2.6 billion, mainly because lower gasoline prices hurt revenue at Canadian Tire’s gas stations. But if you exclude fuel-station revenue, the company’s overall sales gained 2.2%....