bce

BELL ALIANT REGIONAL COMMUNICATIONS INCOME FUND $32 (Toronto symbol BA.UN; Conservative Growth Portfolio, Utilities sector; Units outstanding: 135.2 million; Market cap: $4.3 billion; SI Rating: Above average) earned $0.58 a unit in first three months of 2007, up 56.8% from $0.37 a year earlier....

TELUS CORP. (Toronto symbols T $62 and T.A $61; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 334.4 million; Market cap: $20.6 billion; SI Rating: Above average) has gained roughly 15% in the past few weeks, as a possible takeover bid for rival BCE Inc. has spurred speculation that Telus could also become a takeover target. It’s also possible the two firms will merge, but that would face strong opposition from telecom regulators and consumer groups. Meanwhile, strong demand for new wireless services such as downloadable video, games and ringtones helped offset slower subscriber growth. That helped increase the company’s total revenue in the first quarter of 2007 to $2.21 billion, up 6.3% from $2.08 billion a year earlier. Earnings jumped 50.0%, to $0.90 a share from $0.60. The most recent figure excludes a one-time charge related to its employee stock option program. Telus’s ongoing investments in its wireless network, as well as new rules that let customers keep their current mobile number, should help it attract more subscribers....

BCE INC. $37.59 (Toronto symbol BCE; SI Rating: Above-Average) is now in discussions with a consortium of three big Canadian pension plans and U.S.-based private equity firm Kohlberg Kravis Roberts about a takeover. This has raised the possibility of a bidding war for the company, since the Ontario Teachers’ Pension Plan is putting together its own group with some other pension funds. Other groups could also enter the bidding. The takeover bids have arisen partly from recent regulatory changes that make it easier for established phone providers like BCE to compete with cable companies. The changes greatly enhance BCE’s long-term prospects, and should help it extract a high bid. It could take several weeks before the first formal offer emerges. The price on the successful bid will depend on market conditions and other factors, but could reach the mid-$40s....

ISHARES DIVIDEND INDEX FUND $23.50 (Toronto symbol XDV; buy or sell through a broker) began trading in December, 2005. The fund currently holds the 30 highest yielding Canadian stocks. These stocks are included in the index based on their dividend growth, yield and average payout ratio. The weight of any one stock in the fund is limited to 10% of the fund’s assets. Its MER is 0.50%. iShares Dividend Index Fund now yields 2.8%. The fund’s top holdings are Manitoba Telecom at 6.8%; CIBC, 6.8%; Bank of Montreal, 6.2%; Russel Metals, 4.6%; TD Bank, 4.7%; National Bank, 4.5%; Teck Cominco, 4.3%; IGM Financial, 4.1%; Royal Bank, 4.0%; and BCE Inc., 3.9%....

BCE INC. $35 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 807.6 million; Market cap: $28.3 billion; SI Rating: Above average) has moved up to its highest level in five years on takeover rumors. Media reports suggest that the Ontario Teachers’ Pension Plan, which owns 5.3% of BCE, may team up with a U.S. firm to offer $40 a share. Acquiring control of BCE could be difficult. Institutions control roughly 22% of BCE’s stock, and could block an offer they feel is too low. Federal regulations limit foreign ownership of Canadian telecom companies to 46%, which makes it harder to recruit non-Canadian investors. Other potential Canadian bidders like Telus would probably face competition concerns, particularly in the highgrowth wireless field....

ISHARES CDN LARGECAP 60 INDEX FUND $76.72 (Toronto symbol XIU; buy or sell through a broker) (formerly called iUnits S&P/TSX 60 Index Participation Fund) is a good low-fee way to buy the top stocks on the TSE. The units hold a basket of stocks that represent the S&P/TSX 60 Index. The index is made up of the 60 largest and most heavily traded stocks on the TSE. Most of the 60 stocks in the index are good quality companies. However, to meet the requirement that all sectors are represented, the index holds a few firms we wouldn’t include, such as Cott Corporation and Celestica. The index’s top holdings are: Royal Bank, 7.1%; Manulife, 6.0%; Bank of Nova Scotia, 5.1%; TD Bank, 4.9%; EnCana Corporation, 4.4%; Suncor Energy, 3.9%; Bank of Montreal, 3.9%; Canadian Natural Resources, 3.3%; CIBC, 3.3%; Sun Life Financial, 2.9%; Barrick Gold, 2.8%; BCE Inc., 2.6%; and Canadian National Railway, 2.5%....

The best exchange-traded funds (ETFs) offer well-diversified, tax-efficient portfolios with very low management fees. Due to buyback and share issue arrangements, ETFs always trade close to their net asset value. Here are some of the best deals available in ETFs. We’ve also analysed one we don’t like. ISHARES CDN LARGECAP 60 INDEX FUND $76.72 (Toronto symbol XIU; buy or sell through a broker) (formerly called iUnits S&P/TSX 60 Index Participation Fund) is a good low-fee way to buy the top stocks on the TSE. The units hold a basket of stocks that represent the S&P/TSX 60 Index. The index is made up of the 60 largest and most heavily traded stocks on the TSE....

BMO DIVIDEND FUND $50.87 (BMO Mutual Funds, 77 King Street West, Suite 4200, Royal Trust Tower, Toronto, Ont., M5K 1J5, 1-800-665-7700; Web site: www.bmo.com. No load — deal directly with the bank) (CWA Rating: Conservative) currently holds about 58.3% of its portfolio in the Financial services industry. Its largest holding is Energy at 16.1%. BMO Dividend Fund’s largest holdings are Manulife Financial, Bank of Nova Scotia, CIBC, Royal Bank of Canada, Enbridge, Toronto-Dominion Bank, Canadian National Railway, TransCanada Corporation, Imperial Oil, Brookfield Asset Management, Thomson Corporation, BCE Inc. and Sun Life Financial. Over the last five years, the $5.7 billion BMO Dividend Fund has posted a 13.2% annual rate of return. That’s just under the S&P/TSX 60’s gain of 13.4%. The fund gained 9.9% over the last year, compared to a gain of 15.0% for the S&P/TSX 60. BMO Dividend’s MER is 1.73%....

BMO Dividend and Royal Dividend hold mostly high-quality stocks. These stocks sometimes run into deep trouble and go through lengthy struggles, just like lesser investments. Eventually, though, most solve their problems and go on to thrive anew. Both funds hold a high proportion of their assets in financial services stocks. However, if you must focus on something, finance is a relatively stable sector. If you do invest in these funds, be sure to adjust the rest of your portfolio so these funds won’t overly concentrate your holdings in the financial sector....

Telus has been a top performer for us in the past few years. It got as low as $7.60 in 2002, mainly because investors feared it paid too much for its 2000 acquisition of wireless provider Clearnet. It then went on to a peak of $66 in September 2006. The final $12 of that rise happened after Telus announced that it planned to turn itself into an income trust. (Telus dropped its conversion plan after Ottawa decided to tax trust distributions.) But most of Telus’s gains since 2002 are due to the huge growth in its wireless business, which has helped offset slowing revenues at its traditional landline operations. Competition in the Canadian wireless industry will undoubtedly intensify in the next decade. But Telus’s ongoing investments in its wireless and traditional phone operations will give it a technological edge that will help fuel its long-term growth....