BCE Inc.
Toronto symbol BCE, provides local and long distance telephone services in Ontario and Quebec. It also operates a nationwide wireless service.
BCE, Telus and Manitoba Telecom are facing rising competition from cable companies, as well as new entrants in the wireless market. However, all three companies have spent heavily on their wireless and high-speed Internet networks in the past few years. That’s letting them launch new services, like Internet-based TV. The extra cash flows from these services should let all three firms raise their already high dividends. BCE INC. $39 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 777.5 million; Market cap: $30.3 billion; Price-to-sales ratio: 1.6; Dividend yield: 5.3%; TSINetwork Rating: Above Average; www.bce.ca) is Canada’s largest provider of telephone, Internet and wireless services. The company’s main subsidiary, Bell Canada, has 6.3 million residential and business customers in Ontario and Quebec....
BELL ALIANT INC. $27 (Toronto symbol BA, Conservative Growth Portfolio, Utilities sector; Shares outstanding: 227.8 million; Market cap: $6.2 billion; Price-to-sales ratio: 1.0; Dividend yield: 7.0%; TSINetwork Rating: Above Average; www.bellaliant.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. Sales of the company’s Internet and TV services are rising. That’s offsetting lower sales from its local and long-distance telephone operations. In the three months ended June 30, 2011, Bell Aliant earned $0.43 a share (the company did not provide comparable year-earlier figures, because it was an income trust)....
BCE INC. $39.38 (Toronto symbol BCE; Shares outstanding: 777.1 million; Market cap: $30.2 billion; TSINetwork Rating: Above Average; Dividend yield: 5.3%; www.bce.ca) earned $663 million in the three months ended June 30, 2011. That’s up 11.4% from $595 million a year earlier. Earnings per share rose 10.3%, to $0.86 from $0.78, on more shares outstanding. The latest earnings beat the consensus estimate of $0.81 a share. BCE’s revenue rose 11.6% in the quarter, to $5.0 billion from $4.4 billion. Revenue fell 2.0% at the wireline division, which accounts for 53% of BCE’s total revenue. This division, which includes BCE’s traditional land-line business, is facing rising price competition. As well, many customers are cancelling their land lines and switching to wireless devices. These losses offset higher revenue from the wireline division’s satellite and Internet-based TV services. Revenue from wireless services (26% of total revenue) rose 6.1%. The company’s recent network upgrades continue to attract new subscribers and prompt existing customers to upgrade their mobile-phone plans. This division added 36,507 subscribers in the quarter (net of deactivations). It now has 7.3 million wireless customers....
When investors see a day like Thursday, with a drop of more than 500 points in the Dow Jones Industrials, they can’t help but wonder if we face a replay of the 2007-2009 market plunge. However, though today’s situation could turn out badly, that’s not inevitable. It’s much different from a few years ago. The 2007-2009 drop was mostly about the collapse of the housing boom and everything that went with it. Today there is no boom that could deflate and bring down the economy. Today’s problem grows out of government attempts at ‘fixing’ the economy in recent years. These fixes, which were mostly unsuccessful, bloated government spending and created huge debts. Today’s main market worry is how the U.S. federal government will attempt to fix its budget deficit and bring its debt down to a manageable level. To top things off, the Obama administration has also brought in big changes in health care, union and environmental rules and so on. Some of these changes face court challenges and political opposition. But some are sure to survive and go into effect. Others are sure to follow....
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One of our favourite Canadian dividend stocks continues to boost its payout
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ISHARES S&P/TSX 60 INDEX FUND $19.21 (Toronto symbol XIU; buy or sell through a broker; 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. Most of the stocks in the index are high-quality companies. However, as it must ensure that all sectors are represented, it holds a few we wouldn’t include, such as Yellow Media Inc. The index’s top holdings are: Royal Bank, 6.9%; TD Bank, 6.3%; Bank of Nova Scotia, 5.4%; Suncor Energy, 5.2%; Potash Corp., 4.1%; Canadian Natural Resources, 3.9%; Barrick Gold, 3.9%; Goldcorp, 3.2%; CN Railway, 3.1%; Bank of Montreal, 3.1%; Manulife Financial, 2.6%; CIBC, 2.6%; BCE, 2.5%; TransCanada Corp., 2.5%; Cenovus Energy, 2.3%; and Teck Resources, 2.2%....
ISHARES DOW JONES CANADA SELECT DIVIDEND INDEX FUND $21.64 (Toronto symbol XDV; buy or sell through a broker; 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 assets. The fund’s MER is 0.50%. It yields 2.7%. The fund’s top holdings are CIBC, 6.4%; Bonterra Energy Corp., 6.0%; National Bank, 5.2%; Bank of Montreal, 5.2%; TD Bank, 5.1%; Telus, 4.6%; IGM Financial, 4.5%; AG Growth International, 4.2%; Royal Bank, 3.9%; Bank of Nova Scotia, 3.8%; BCE, 3.7%; and TMX Group, 3.6%. The fund holds 51.8% of its assets in financial stocks. Utilities are next, at 24.0%. 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....
Exchange-traded funds (ETFs) may have a place in your portfolio. That’s because, unlike many other financial innovations, they don’t load you up with heavy management fees, or tie you down with high redemption charges if you decide to get out of them. Instead, they give you a low-cost, flexible, convenient alternative to mutual funds. ETFs trade on stock exchanges, just like stocks. Prices are quoted in newspaper stock tables and online. You’ll have to pay brokerage commissions to buy and sell ETFs. However, ETFs’ low management fees still give them a cost advantage over most conventional mutual funds. As well, shares are only added or removed when the underlying index changes. As a result of this low turnover, you won’t incur the regular capital-gains bills generated by the yearly distributions most conventional mutual funds pay out to unitholders....
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MANITOBA TELECOM SERVICES INC. $34.01 (Toronto symbol MBT; Shares outstanding: 64.7 million; Market cap: $2.3 billion; TSINetwork Rating: Average; Dividend yield: 5.0%; www.mts.ca) gets 53% of its revenue from its MTS division, which mainly sells traditional and wireless telephone services to consumers in Manitoba. The remaining 47% comes from its Allstream division, which sells communication services to businesses across Canada. In the three months ended March 31, 2011, Manitoba Telecom’s revenue fell slightly, to $439.3 million from $442 million a year earlier. The MTS division’s revenue rose 3%. Allstream’s revenue fell 4.5%, mostly because it is closing less-profitable businesses. Earnings per share jumped 59.5%, to $0.67 from $0.42. The gains came from cost-saving measures, including layoffs. More important, its restructured Allstream division is showing improved results....