bce

BCE INC. $44 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 773.9 million; Market cap: $34.1 billion; Priceto- sales ratio: 1.6; Dividend yield: 5.2%; TSINetwork Rating: Above Average; www.bce.ca) has 5.9 million telephone customers in Ontario and Quebec, as well as 2.1 million high-speed Internet subscribers and 2.1 million TV clients. In addition, the company’s wireless business now has 7.5 million subscribers across Canada.

BCE continues to expand its media division, which includes the 28-station CTV Television Network, 30 specialty channels and 33 radio stations. The company recently agreed to buy Astral Media (Toronto symbols ACM.A and ACM.B), which owns 22 TV stations, 84 radio stations and several pay TV and specialty channels, such as The Movie Network, Family Channel and Teletoon. Astral also owns billboards and sells other outdoor advertising in Quebec, Ontario and B.C.

The purchase price is $3.4 billion, including $380 million of Astral’s debt. BCE will pay roughly 75% of this cost in cash and 25% in common shares.

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All three of these telecom firms are using their steady cash flows to upgrade their networks with the latest technology. That’s letting them launch profitable new services, such as Internet TV and video calling, that are cutting their reliance on their shrinking telephone (or land line) businesses. These popular services are also helping all three companies maintain their high dividends. BCE INC. $44 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 773.9 million; Market cap: $34.1 billion; Priceto- sales ratio: 1.6; Dividend yield: 5.2%; TSINetwork Rating: Above Average; www.bce.ca) has 5.9 million telephone customers in Ontario and Quebec, as well as 2.1 million high-speed Internet subscribers and 2.1 million TV clients. In addition, the company’s wireless business now has 7.5 million subscribers across Canada. BCE continues to expand its media division, which includes the 28-station CTV Television Network, 30 specialty channels and 33 radio stations. The company recently agreed to buy Astral Media (Toronto symbols ACM.A and ACM.B), which owns 22 TV stations, 84 radio stations and several pay TV and specialty channels, such as The Movie Network, Family Channel and Teletoon. Astral also owns billboards and sells other outdoor advertising in Quebec, Ontario and B.C....

BELL ALIANT INC. $25.09 (Toronto symbol BA; Shares outstanding: 227.8 million; Market cap: $5.7 billion; TSINetwork Rating: Average; Dividend yield: 7.6%; www.aliant.ca) sells telephone and Internet services to 2.8 million customers in Atlantic Canada, as well as rural parts of Ontario and Quebec. The company also sells wireless services through an alliance with BCE, which owns 43.8% of Bell Aliant.

The company faces strong competition from cable providers. In addition, many of its phone customers are switching to wireless devices. However, Bell Aliant’s wireless agreement with BCE, plus upgrades to its high-speed Internet network, are helping it hold on to its current clients and attract new ones.

Bell Aliant’s high-speed fibre optic systems now reach 458,000 homes. The company plans to increase that to 650,000 by the end of 2012. Its capital expenditures were $177 million in the latest quarter, up 14.8% from a year earlier.

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TELUS CORP., Toronto symbols T $64.00 and T.A $62.68, has revived its plan to merge its common shares (one vote per share) and its non-voting class A shares into a single class. Under the terms of the proposal, each non-voting share will become one common share. Investors in each share class, voting separately, must approve the plan at a special meeting on October 17, 2012. The company cancelled a vote on the proposal that was scheduled for May 2012 because it felt it had little chance of winning. That’s because U.S.-based hedge fund Mason Capital, which now owns around 19% of Telus’s common shares and a small portion of the non-voting shares, said it would vote against the plan. Mason is using a complex stock-trading strategy that would let it lock in a profit if shareholders reject the proposal....

BCE INC., $45.04, Toronto symbol BCE, rose 6% this week after it reported much-higher-than-expected earnings. The company also raised its dividend for the eighth time since the fourth quarter of 2008. In the three months ended June 30, 2012, BCE earned $788 million, or $1.02 a share. That’s up 18.9% from $663 million, or $0.86 a share, a year earlier. These figures exclude costs to integrate recent acquisitions and gains on investment sales. On that basis, the latest earnings easily beat the consensus estimate of $0.81 a share. Overall revenue fell 0.6%, to $4.9 billion from $5.0 billion. Revenue at the company’s traditional telephone business (which supplies 57% of BCE’s overall revenue) fell 3.9%, partly due to strong competition from cable companies....

We developed our TSINetwork ratings to help investors quickly and easily identify stocks with the asset size and investment quality to weather market downturns and changing industry conditions. Stocks of this quality are the best investments for long-term profits. You will find our TSINetwork ratings (Highest Quality, Above Average, Average and Extra Risk) next to each stock we recommend in our newsletters. Obviously, we take a number of factors into account before we assign these ratings. Many involve a company’s financial profile....

BELL ALIANT INC. $25.09 (Toronto symbol BA; Shares outstanding: 227.8 million; Market cap: $5.7 billion; TSINetwork Rating: Average; Dividend yield: 7.6%; www.aliant.ca) sells telephone and Internet services to 2.8 million customers in Atlantic Canada, as well as rural parts of Ontario and Quebec. The company also sells wireless services through an alliance with BCE, which owns 43.8% of Bell Aliant. The company faces strong competition from cable providers. In addition, many of its phone customers are switching to wireless devices. However, Bell Aliant’s wireless agreement with BCE, plus upgrades to its high-speed Internet network, are helping it hold on to its current clients and attract new ones. Bell Aliant’s high-speed fibre optic systems now reach 458,000 homes. The company plans to increase that to 650,000 by the end of 2012. Its capital expenditures were $177 million in the latest quarter, up 14.8% from a year earlier....

POTASH CORP. OF SASKATCHEWAN, $44.49, Toronto symbol POT, is the world’s largest fertilizer producer. It has six potash mines in Saskatchewan and one in New Brunswick. The company sells its potash to customers outside of Canada and the U.S. through Canpotex, a marketing and exporting firm that is equally owned by Potash Corp., Agrium (see below) and Mosaic Co. (New York symbol MOS). This week, a U.S. court agreed to hear a lawsuit that accuses Canpotex, as well as potash producers in Russia and Belarus, of colluding, or working together, to cut production and push up prices. However, cases like this are often difficult to prove....

BCE INC. $41.54 (Toronto symbol BCE; Shares outstanding: 773.6 million; Market cap: $32.1 billion; TSINetwork Rating: Above Average; Dividend yield: 5.2%; www.bce.ca) is teaming up with a group of other investors, including the Ontario Teachers’ Pension Plan, to buy privately held Q9 networks Inc.

Toronto-based Q9 provides data-storage and web-hosting services to businesses across Canada. It has 11 data centres in Ontario, Alberta and B.C.

This investment will help BCE take advantage of growing demand from business clients for reliable cloud-computing services (the general term for shifting software and data off of users’ machines and onto service providers’ machines via the Internet). The company already operates six data centres. It will open a seventh later this year.

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ISHARES DOW JONES CANADA SELECT DIVIDEND INDEX FUND $20.08 (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 4.5%.

The fund’s top holdings are CIBC, 6.9%; National Bank, 6.0%; TD Bank, 5.6%; Bank of Montreal, 5.2%; Bonterra Energy, 5.2%; AG Growth International, 4.8%; Royal Bank of Canada, 4.3%; Bank of Nova Scotia, 4.3%; and BCE Inc., 4.0%.

The fund holds 54.1% of its assets in financial stocks. Utilities are next, at 21.4%. 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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