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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....

How you can make winning stock picks with our TSINetwork ratings We display our ratings next to every stock we recommend in our newsletters

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....

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....