BCE Inc.
Toronto symbol BCE, provides local and long distance telephone services in Ontario and Quebec. It also operates a nationwide wireless service.
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....
BCE INC. $35.41 (Toronto symbol BCE; Shares outstanding: 755.6 million; Market cap: $26.8 billion; TSI Network Rating: Above Average; Dividend yield: 5.6%; www.bce.ca) continues to profit from recent upgrades to its wireless and high-speed Internet networks. As a result, BCE’s earnings rose 11.9% in 2010, to $2.2 billion from $1.9 billion in 2009. Earnings per share rose 13.6%, to $2.84 from $2.50. Revenue rose 1.9% in 2010, to $18.1 billion from $17.7 billion. Wireline revenue (which accounts for 57% of BCE’s total revenue) rose just 0.3%. New high-speed Internet and satellite-TV subscribers offset lower local and long-distance telephone revenue. At the end of 2010, BCE had 2.1 million high-speed Internet subscribers (up 2.0%) and 2.0 million TV subscribers (up 3.7%)....
BCE INC., $35.90, Toronto symbol BCE, continues to profit from recent upgrades to its wireless and high-speed Internet networks. As a result, BCE’s earnings rose 11.9% in 2010, to $2.2 billion from $1.9 billion in 2009. The company spent $500 million on share buybacks in 2010. Because of fewer shares outstanding, earnings per share rose 13.6%, to $2.84 from $2.50. These figures exclude costs related to a restructuring plan, which included cutting jobs, relocating employees and selling excess real estate. The latest earnings also beat the consensus estimate of $2.83 a share. Revenue rose 1.9% in 2010, to $18.1 billion from $17.7 billion. Wireline revenue (which accounts for 57% of BCE’s total revenue) rose just 0.3%. New high-speed Internet and satellite-TV subscribers offset lower local and long-distance telephone revenue. At the end of 2010, the company had 2.1 million high-speed Internet subscribers (up 2.0% from a year earlier) and 2.0 million TV subscribers (up 3.7%)....
These two former income trusts recently converted to corporations in response to Ottawa’s tax on income-trust distributions. That means they must now pay corporate taxes. Even so, their high payouts (which are now dividends) seem secure. PENGROWTH ENERGY CORP. $12 (Toronto symbol PGF; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 326.0 million; Market cap: $3.9 billion; Price-to-sales ratio: 2.4; Dividend yield: 7.0%; TSINetwork Rating: Average; www.pengrowth.com) is the new name of Pengrowth Energy Trust. It produces oil and natural gas from properties in Alberta, B.C. and Saskatchewan. Pengrowth also holds interests in other energy projects, such as its 8.4% stake in the Sable Offshore Energy Project, which operates three offshore-drilling platforms south of Nova Scotia. Roughly 60% of the company’s production is natural gas. The remaining 40% is oil. Low gas prices have hurt Pengrowth’s earnings and held back its cash flow. However, it has locked in prices for 23% of its 2011 daily production at $5.72 per thousand cubic feet. That’s higher than today’s price of $4.30. Pengrowth focuses on proven properties with large reserves and predictable production. That helps cut its risk....
Blue chip stocks in Canada’s telephone industry continue to face rising competition. Along with wireless and cable companies, Internet-based phone services, such as Skype, continue to gain popularity. As well, three new wireless providers (Globalive’s WIND Mobile, Mobilicity and Public Mobile) entered the Canadian market in 2010. More new wireless firms are likely to follow. This rising competition will continue to put pressure on BCE Inc. (symbol BCE on Toronto), Canada’s largest telephone-service provider. In light of this and other developments surrounding the stock, we’ve updated our buy/sell/hold advice on BCE in the latest Canadian Wealth Advisor, our newsletter for safety-conscious conservative investing....