BCE Inc.

TELUS CORP. $47.65 (Toronto symbol T.A; Shares outstanding: 320.7 million; Market cap: $15.6 billion; TSINetwork Rating: Above Average; Dividend yield: 4.2%; www.telus.com) is Canada’s second-largest telephone company, after BCE Inc. Telus has 6.9 million wireless subscribers across Canada. Its traditional phone business has 3.8 million customers in B.C., Alberta and eastern Quebec. Telus also has 1.2 million Internet subscribers. Its new “Telus TV” service, which operates through phone lines, has just 266,000 subscribers. In the three months ended September 30, 2010, Telus’ earnings rose 6.0%, to $0.89 a share from $0.84 a year earlier. The company earned higher profits from wireless and Internet services. That offset a decline in local and long-distance customers. Telus gets 51% of its earnings from wireless. It added 53,000 wireless subscribers in the latest quarter, up 22.4%. High-profit-margin smartphones account for 28% of its wireless subscribers, up from 18%....

Telus’ focus on the expanding, but highly competitive wireless market gives it a narrower base of business than BCE. That risk is reflected in Telus’ higher p/e and lower yield. Telus is still a buy, but BCE is the more conservative choice. TELUS CORP. $47.65 (Toronto symbol T.A; Shares outstanding: 320.7 million; Market cap: $15.6 billion; TSINetwork Rating: Above Average; Dividend yield: 4.2%; www.telus.com) is Canada’s second-largest telephone company, after BCE Inc. Telus has 6.9 million wireless subscribers across Canada. Its traditional phone business has 3.8 million customers in B.C., Alberta and eastern Quebec. Telus also has 1.2 million Internet subscribers. Its new “Telus TV” service, which operates through phone lines, has just 266,000 subscribers. In the three months ended September 30, 2010, Telus’ earnings rose 6.0%, to $0.89 a share from $0.84 a year earlier. The company earned higher profits from wireless and Internet services. That offset a decline in local and long-distance customers....

BCE INC. $36.21 (Toronto symbol BCE; Shares outstanding: 755.6 million; Market cap: $27.4 billion; TSI Network Rating: Above Average; Dividend yield: 5.1%; www.bce.ca) is Canada’s largest and most diversified provider of telephone, Internet and wireless services. BCE’s main telephone subsidiary, Bell Canada, has 6.8 million customers in Ontario and Quebec. The company also owns 44.1% of Bell Aliant (Toronto symbol BA) which has over 3.1 million telephone customers in Atlantic Canada and rural parts of Ontario and Quebec. BCE sells wireless services to 6.9 million subscribers across Canada. As well, it has 2.1 million high-speed Internet customers and 2.0 million ExpressVu satellite-TV subscribers....

Investors are paying more attention to dividend yields (a company’s total annual dividends paid per share divided by the current stock price) as stock markets continue to recover. Companies are responding by doing their best to maintain, or even increase, their dividend payments. That’s good news for investors, because dividends are more dependable than capital gains as a source of income. A couple of decades ago, you could assume that dividends would contribute up to a third of your long-term investment returns, without even considering the tax-cutting effects of the dividend tax credit. Earlier in this decade, dividend yields were generally too low to provide a third of investment returns. But now that yields have moved up and interest rates have moved down, it’s realistic to assume they will once again contribute as much as a third of your total return....

PLEASE NOTE: In next week’s Successful Investor Hotline, we’ll reveal our #1 stock pick for 2011. Don’t miss this unique opportunity to profit. TORSTAR CORP., $12.50, Toronto symbol TS.B, has received $40 million in connection with the takeover of The Globe and Mail newspaper by the Thomson family, which now owns 85% of the paper. BCE Inc. (Toronto symbol BCE) owns the remaining 15%. The proceeds are equal to 4% of Torstar’s $989-million market cap. The sale of The Globe and Mail is part of BCE’s plan to acquire full control of CTVglobemedia, the private company that owns the CTV Television Network, which consists of 27 TV stations. CTVglobemedia also owns 30 specialty channels and 34 radio stations. It also owned The Globe and Mail....

BELL ALIANT INC. $26.70 (Toronto symbol BA: Shares outstanding: 127.4 million; Market cap: $3.4 billion; TSINetwork Rating: Above Average; Yield: 10.9%; www.aliant.ca) is the new name of Bell Aliant Regional Income Fund after its conversion to a dividend-paying corporation on January 1, 2011. Bell Aliant has over 3.1 million telephone customers in Atlantic Canada and rural parts of Ontario and Quebec. BCE owns 44.1% of Bell Aliant. The conversion forces Bell Aliant to pay income taxes. In response, the company will change the rate and frequency of its payout. Starting in March 2011, it will switch to quarterly dividends of $0.475 a share. The new annual rate of $1.90 (down from $2.90) will yield 7.1%, based on today’s price....

TELUS CORP. $43.80 (Toronto symbol T.A; Shares outstanding: 335.6 million; Market cap: $14.7 billion; TSINetwork Rating: Above Average; Dividend yield: 4.8%; www.telus.com) expects its revenue to rise between 1% and 4% in 2011. As well, its earnings per share should rise 9% to 22%, to between $3.50 and $3.90. The stock now trades at 11.8 times the midpoint of that range. The gains will mainly come from Telus’ recently upgraded wireless and high-speed Internet networks. That’s helping the company attract new customers and deal with new competitors in Canada’s wireless market. Telus is still a buy....

Riverbed Technology Inc., $37.26, symbol RVBD on Nasdaq (Shares outstanding: 73.5 million; Market cap: $2.7 billion, www.riverbed.com), is a leader in wide area network (WAN) optimization. As more workers move outside the office and computer users increasingly access remote datacenters, programs and data that were initially intended for local area networks (LAN) are being slowed down by WAN connections, which have less bandwidth capacity. Riverbed’s products aim to improve the performance of programs, and increase data transmission speed across networks, while lowering the need to add new hardware. Riverbed’s sales and profits are rising. Most important, it’s making sales to large, well-established customers in a range of industries....

Shaw Communications, $20.70, symbol SJR.B on Toronto (Shares outstanding: 463.6 million; Market cap: $9.0 billion, www.shaw.ca), is Canada’s largest cable-television operator, with 2.3 million basic cable subscribers in Alberta, B.C., Saskatchewan, Manitoba and Ontario. The company also owns Shaw Direct, which has 902,000 satellite subscribers. Shaw also provides high-speed Internet and telephone services. Shaw trades at 14.7 times this year’s forecast earnings of $1.41 a share. The shares yield a high 4.3%. However, the company faces strong competition for Internet subscribers from Telus Corp., $44.66, symbol T.A on Toronto (Shares outstanding: 320.7 million; Market cap: $14.7 billion). As well, Telus offers an Internet-based television service, which it is planning to expand....

We display our TSINetwork ratings (Highest Quality, Above Average, Average, Extra Risk, Speculative and Start-up) next to every stock we recommend in our newsletters — including our flagship publication, The Successful Investor. We designed our TSINetwork ratings to help you quickly and easily identify great stock picks for long-term profits. These stocks have the asset size and investment quality to weather market downturns and changing industry conditions. Here are three factors we consider when we assign a rating to a stock....