BCE Inc.

Manitoba Telecom’s annual dividend took a big jump in 2004, from $1 share to $2.60, mostly due to investor pressure at a time when many companies were converting to high-yield income trusts. Dividends remained steady until August 2010. That’s when the company cut its annual payout by 34.6%, to $1.70 a share, to free up cash for network upgrades. Now, Manitoba Tel has the funds to continue to invest for growth, and still pay $1.70 a share for a high 5.0% yield. 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....

BCE INC. $38.47 (Toronto symbol BCE; Shares outstanding: 759.5 million; Market cap: $30.3 billion; TSINetwork Rating: Above Average; Dividend yield: 5.4%; www.bce.ca) continues to attract new wireless customers, thanks to its recent network upgrades. Strong revenue from wireless, high-speed Internet and TV services continues to offset lower revenue from BCE’s traditional phone operations. That’s why the company’s overall revenue rose just 0.7% in the three months ended March 31, 2011, to $4.5 billion from $4.4 billion a year earlier. However, BCE continues to realize savings from a recent restructuring. Before one-time items, earnings rose 16.3% in the latest quarter, to $543 million from $467 million. Earnings per share rose 18.0%, to $0.72 from $0.61, on fewer shares outstanding. That beat the consensus earnings estimate of $0.69 a share....

TELUS CORP. (Toronto symbols T $52 and T.A $50; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 324 million; Market cap: $16.8 billion; Price-to-sales ratio: 1.7; Dividend yield: 4.2%; TSINetwork Rating: Above Average; www.telus.com) is Canada’s second-largest telephone company after BCE Inc. (Toronto symbol BCE). Telus has been expanding its wireless operations over the past few years. As a result, it now gets 52% of its earnings from its 7.0 million wireless subscribers across Canada. Telus now has 28% of the wireless market. Market leader Rogers Communications Inc. (Toronto symbol RCI.B) has 36%. The remaining 48% of the company’s earnings come from its traditional phone business, which has 3.7 million customers in British Columbia, Alberta and eastern Quebec. Telus also has 1.2 million Internet subscribers....

CANADIAN TIRE CORP., $62.38, Toronto symbol CTC.A, is buying The Forzani Group Ltd. (Toronto symbol FGL), which sells sporting goods through over 500 stores in Canada, including SportChek and Athlete’s World. Forzani gets 70% of its sales by selling clothing and footwear, so there is little overlap with the sports equipment (such as skates and hockey sticks) that Canadian Tire stores mainly sell. To put the $771-million purchase price in context, Canadian Tire earned $58.4 million, or $0.71 a share, in the three months ended April 2, 2011. That missed the consensus estimate of $0.72 a share. Still, the latest earnings are up 13.2% from $51.6 million, or $0.63 a share, a year earlier....

Telus is one of our top dividend-paying stocks. Meanwhile, it continues to grow due to its heavy investments in its wireless networks. Thanks to rising wireless revenue, the company has tripled its dividend since 2003. It now plans to raise its dividend twice a year to 2013, and increase the rate by 10% a year. Demand for wireless services should continue to rise. Right now, about 73% of Canadians use a wireless device. That should rise to around 80% in the next two years, as more people upgrade from standard cellphones to smartphones and tablet computers. TELUS CORP. (Toronto symbols T $52 and T.A $50; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 324 million; Market cap: $16.8 billion; Price-to-sales ratio: 1.7; Dividend yield: 4.2%; TSINetwork Rating: Above Average; www.telus.com) is Canada’s second-largest telephone company after BCE Inc. (Toronto symbol BCE)....

BCE continues to use its strong cash flow of almost $6 billion a year to make acquisitions and improve its services. That’s already fuelling its profit growth. It will also help it keep expanding and improving its wireless and high-speed Internet networks, buying back shares and paying (and possibly further raising) its dividend. BCE INC. $35.86 (Toronto symbol BCE; Shares outstanding: 774.2 million; Market cap: $27.8 billion; TSINetwork Rating: Above Average; Dividend yield: 5.5%; www.bce.ca) provides telephone and Internet services in Ontario and Quebec. It also sells wireless and satellite-TV services across Canada. In the three months ended December 31, 2010, BCE’s revenue rose slightly, to $4.02 billion from $3.98 billion in the prior year. Before one-time items, earnings rose 32.8%, to $0.60 from $0.51. Strong demand for its highly profitable wireless and television services offset falling revenue from the company’s traditional telephone operations....

Chances are that the May 2 election results will lead to a period of investor-friendly legislation in Canada, with growth in the economy and a healthy stock-market atmosphere. Just one example: With a Conservative majority in Parliament, we may soon see higher contribution limits for both RRSPs and Tax-Free Savings Accounts. My view is that there’s a beneficial but widely overlooked kinship between the majority Conservatives and the NDP opposition. Both parties seem to favour small business over big — or, at least, they don’t cater to big business, as too many other parties and governments do. For 40 years, the NDP has been campaigning against “corporate welfare bums” — big businesses that seek government subsidies, regulations that hinder the rise of new competitors, and trade rules that frustrate foreign competitors....

BELL ALIANT INC. $27.01 (Toronto symbol BA: Shares outstanding: 227.8 million; Market cap: $6.2 billion; TSINetwork Rating: Above Average; Yield: 7.0%; www.aliant.ca) provides telephone services in Atlantic Canada, as well as rural parts of Ontario and Quebec. BCE Inc. owns 44.1% of Bell Aliant. Bell Aliant converted from an income trust on January 1, 2011. The conversion forces Bell Aliant to pay income taxes. In response, the company changed the rate and frequency of its payout, starting in March 2011. The company now pays quarterly dividends of $0.475 a share. The new annual rate of $1.90 (down from $2.90) now yields 7.0%. That’s still a high payout for a dividend paying stock and high as well compared to similar telephone utilities. As well, investors who hold Bell Aliant outside an RRSP benefit from the dividend tax credit....

TORSTAR CORP. $15 (Toronto symbol TS.B; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 79.1 million; Market cap: $1.2 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.torstar.com) publishes The Toronto Star, which is Canada’s largest daily newspaper by circulation. The company also publishes three other daily newspapers and over 100 weeklies, mainly in southern Ontario. Newspapers account for about 70% of Torstar’s revenue, and 60% of its earnings. The company’s other main business is wholly owned Harlequin Enterprises Ltd., the world’s leading publisher of romance novels. Torstar recently received $291.6 million from the sale of its 20% stake in CTVglobemedia to BCE Inc. (Toronto symbol BCE). This business owns CTV Television and other broadcasting businesses....

Torstar and Transcontinental should continue to benefit from rising advertising revenue as the economy improves. As well, both companies have bought new, efficient presses that have lowered their operating costs. Moreover, both are cheap in relation to their earnings. TORSTAR CORP. $15 (Toronto symbol TS.B; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 79.1 million; Market cap: $1.2 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.torstar.com) publishes The Toronto Star, which is Canada’s largest daily newspaper by circulation. The company also publishes three other daily newspapers and over 100 weeklies, mainly in southern Ontario. Newspapers account for about 70% of Torstar’s revenue, and 60% of its earnings. The company’s other main business is wholly owned Harlequin Enterprises Ltd., the world’s leading publisher of romance novels....