bce

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....

PLEASE NOTE: Our next Hotline will go out on Friday, April 15, 2011. TECK RESOURCES LTD., $55.06, Toronto symbol TCK.B, rose 8% this week after the company reached a new deal with the union at its Elkview metallurgical coal mine in B.C. The deal should end a two-month strike. Elkview is the second-largest of Teck’s six coal mines in B.C., so settling this dispute will help the company take advantage of rising demand for its coal by steelmakers in Asia. As well, the company continues to benefit from higher copper prices. It should also see higher demand for its coal and zinc as Japan rebuilds following last month’s earthquake and tsunami....

BCE’s chief executive officer, George Cope, recently exercised 1.233 million in stock options and received 1.233 million shares of BCE. He then sold those shares. That represented about half of his total stock-option and common-share holdings. Cope’s sale was for personal portfolio-planning purposes. That’s not uncommon for an executive with a lot of personal wealth tied up in a single investment. Insiders may sell for a variety of personal reasons that have nothing to do with the company. On the other hand, insiders only make substantial buys for one reason — they think the company has attractive investment appeal. That’s why this insider sale doesn’t change our view of the stock....

Dividend 15 Split Corp., $12.30, symbol DFN on Toronto (Shares outstanding: 13.6 million; Market cap: $167.3 million; www.dividend15.com), is a split-share investment corporation that holds shares of 15 companies: BCE Inc., CI Financial Corporation, Bank of Nova Scotia, Thomson Reuters, National Bank of Canada, TransAlta Corporation, Sun Life Financial, Canadian Imperial Bank of Commerce, TransCanada Corporation, Manulife Financial, TD Bank, Royal Bank of Canada, Bank of Montreal, Telus Corporation and Enbridge. The company can also invest up to 15% of its portfolio in other stocks. Dividend 15 Split Corp. has two share classes: Dividend 15 Split Corp. capital shares (Toronto symbol DFN), and Dividend 15 Split Corp. preferred shares (Toronto symbol DFN.PR.A)....

Canada’s big telephone companies face strong competition from cable companies and new entrants in the wireless market. However, their traditional phone businesses continue to provide strong cash flows. That’s letting them upgrade their networks, and maintain or increase their dividends. BCE INC. $35 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 752.3 million; Market cap: $24.4 billion; Price-to-sales ratio: 1.5; Dividend yield: 5.6%; 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 6.5 million residential and business customers in Ontario and Quebec. BCE sells wireless services to 7.2 million subscribers across Canada. As well, it has 2.1 million high-speed Internet customers and 2.0 million satellite-TV subscribers....

ISHARES DOW JONES CANADA SELECT DIVIDEND INDEX FUND $21.65 (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 1.9%. The fund’s top holdings are CIBC, 6.9%; Bonterra Energy Corp., 6.3%; Bank of Montreal, 5.2%; National Bank, 5.0%; TD Bank, 5.0%; AG Growth International, 4.9%; IGM Financial, 4.2%; Telus, 4.1%; Royal Bank, 4.0%; Bank of Nova Scotia, 3.9%; BCE, 3.5%; and TMX Group, 3.4%. The fund holds 52.9% of its assets in financial stocks. Utilities are next, at 22.5%. 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....