BCE Inc.

BCE INC. $46.26 (Toronto symbol BCE; Shares outstanding: 775.4 million; Market cap: $35.4 billion; TSINetwork Rating: Above Average; Dividend yield: 5.0%; www.bce.ca) is Canada’s largest provider of telephone, Internet and wireless services. It also sells satellite and Internet TV services across the country.

In the three months ended December 31, 2012, BCE’s earnings per share rose 4.8%, to $0.65 from $0.62 a year earlier. Revenue was unchanged at $5.2 billion. Revenue at the traditional telephone business, which supplies 51% of BCE’s overall revenue, fell 3.7%, partly due to strong competition from cable companies.

However, many of BCE’s land-line clients are switching to mobile phones, which are more profitable for the company. That helped fuel a 6.8% revenue increase at the wireless division (28% of total revenue). Revenue at BCE’s media division (11%) rose 2.2%.
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TORSTAR CORP., $7.03, Toronto symbol TS.B, fell 11% this week after the company reported lower-than-expected earnings. In 2012, Torstar’s earnings fell 52.6%, to $103.2 million, or $1.30 a share. In 2011, it earned $217.7 million, or $2.74 a share. If you exclude writedowns and other unusual items, earnings per share would have declined 25.0%, to $1.35 from $1.80. On that basis, the latest earnings missed the consensus estimate of $1.48 a share. Overall revenue fell 4.1%, to $1.49 billion from $1.55 billion. Revenue at the newspaper division, which supplies 71% of the total, fell 2.8%. The slow economy continues to hurt advertising revenue at the company’s newspapers, particularly The Toronto Star, its flagship paper. As well, its 50%-owned Workopolis.com job-search website is facing rising competition, and employers are advertising fewer positions. As a result, Torstar has written down the value of this investment by $11.0 million....

BCE has raised its dividend nine times since December 2008. The stock yields a high 5.1%. The shares are also up 118% since the end of 2008, but they are still reasonably priced in relation to BCE’s steadily rising earnings.

BCE INC. $46.26 (Toronto symbol BCE; Shares outstanding: 775.4 million; Market cap: $35.4 billion; TSINetwork Rating: Above Average; Dividend yield: 5.0%; www.bce.ca) is Canada’s largest provider of telephone, Internet and wireless services....

BELL ALIANT INC. $26.63 (Toronto symbol BA; Shares outstanding: 227.8 million; Market cap: $6.1 billion; TSINetwork Rating: Average; Dividend yield: 7.1%; www.aliant.ca) sells phone and Internet services to 2.5 million customers in Atlantic Canada and rural Ontario and Quebec....

ISHARES DOW JONES CANADA SELECT DIVIDEND INDEX FUND $22.24 (Toronto symbol XDV; buy or sell through brokers; ca.ishares.com) holds 30 of the highest-yielding Canadian stocks. Its selections are based on dividend growth, yield and payout ratio. The weight of any one stock is limited to 10% of its assets. The fund’s MER is 0.50%. It yields 4.2%.

The fund’s top holdings are CIBC, 6.7%; Bonterra Energy, 6.0%; National Bank, 6.0%; TD Bank, 5.5%; Bank of Montreal, 5.4%; Royal Bank, 4.4%; Telus Corp., 4.4%; Bank of Nova Scotia, 4.1%; BCE Inc., 4.1%; and IGM Financial, 3.9%.

The fund holds 51.5% of its assets in financial stocks. The top Canadian finance stocks have sound prospects. However, if you invest in this ETF, be sure to adjust the rest of your portfolio so it won’t be overly concentrated in the financial sector.

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ISHARES S&P/TSX 60 INDEX FUND $18.50 (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 0.17% of assets.

The index mostly consists of high-quality companies. However, as the fund must ensure that all sectors are represented, it holds a few stocks we wouldn’t include.

The index’s top holdings are Royal Bank, 7.8%; TD Bank, 6.7%; Bank of Nova Scotia, 6.0%; Suncor Energy, 4.6%; Bank of Montreal, 3.6%; CN Railway, 3.6%; Potash Corp., 3.3%; Enbridge, 3.1%; Trans- Canada Corp., 3.0%; BCE Inc., 3.0%; CIBC, 2.9%; Canadian Natural Resources, 2.9%; Barrick Gold, 2.9%; Goldcorp, 2.6%; Manulife Financial, 2.3%; Cenovus Energy, 2.2%; and Telus Corp., 1.9%.

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BCE INC. $45 (www.bce.ca) purchased The Source chain of 700 mall-based electronic stores in 2009. This ear, it plans to open 20 new outlets. These stores give BCE a low-risk way to promote its mobile phones and TV services. Best Buy.

TECK RESOURCES LTD., $33.11, Toronto symbol TCK.B, reported better-than-expected earnings for 2012. However, concerns over lower prices for coal, copper and other commodities caused the stock to fall 10% this week. In 2012, Teck’s earnings fell 38.5%, to $1.5 billion, or $2.60 a share. These figures exclude unusual items, such as gains on asset sales. On that basis, the latest earnings beat the consensus estimate of $2.48 a share. In 2011, Teck earned a record $2.5 billion, or $4.18 a share. Revenue fell 10.2%, to $10.3 billion from $11.5 billion. The company met its production targets for all of its key commodities. However, the slow global economy hurt prices for its coal (down 24.9%), lead (down 13.8%), molybdenum (down 13.3%), silver (down 11.4%), zinc (down 11.1%), and copper (down 9.8%)....

ATCO LTD. $83 (www.atco.com) has raised its quarterly dividend by 14.5%, to $0.375 a share from 0.3275. The new annual rate of $1.50 yields 1.8%. The company has raised its dividend each year for the past 20 years. Moreover, at current rices, you can buy a share of ATCO for $83 and get roughly $86 worth of 52.8%-owned subsidiary Canadian Utilities (see below). This means you get ATCO’s other businesses, such as building temporary structures for mining firms, for free. Best Buy. CANADIAN UTILITIES LTD. $74 (www.canadianutilities.com) has raised its dividend every year since 1972. The new annual rate of $1.94 a share, up 9.6% from $1.77, yields 2.6%. Buy. BCE INC. $45 (www.bce.ca) purchased The Source chain of 700 mall-based electronic stores in 2009. This ear, it plans to open 20 new outlets. These stores give BCE a low-risk way to promote its mobile phones and TV services. Best Buy.

Most stock markets have risen lately. But as always, they remain subject to unexpected downturns. Even so, we feel the long-term outlook is for higher stock prices. One way to profit from rising markets is to add exchange traded funds (ETFs) that track major stock indexes to your portfolio. ETFs trade on stock exchanges, just like stocks. Prices are quoted in newspaper stock tables and online. You must pay brokerage commissions to buy and sell ETFs, but their low management fees still give them a cost advantage over most mutual funds....