Enbridge Inc.

TORONTO-DOMINION BANK, $71.10, Toronto symbol TD, has agreed to buy MBNA’s Canadian credit card operations from Bank of America (New York symbol BAC). This purchase will add 1.8 million customers to TD’s roughly 4.0 million credit-card accounts. MBNA is also the largest issuer of MasterCard cards in Canada, which will diversify TD’s Visa cards. TD will pay $8.5 billion for MBNA’s Canadian credit-card operations when the deal closes, probably early next year. To put that in context, TD earned $5.2 billion, or $5.77 a share, in its 2010 fiscal year, which ended October 31, 2010....

Both TransCanada and Enbridge are building new oil pipelines. These are expensive projects, but the companies’ regulated businesses give them lots of cash flow for expansion and continued dividend increases. TRANSCANADA CORP. $40 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 703.0 million; Market cap: $27.3 billion; Price-to-sales ratio: 3.4; Dividend yield: 4.3%; TSINetwork Rating: Above Average; www.transcanada.com) operates a pipeline network that pumps natural gas from Alberta to eastern Canada and the U.S. It also owns or invests in over 20 power plants in Canada and the U.S. In June 2010, the company opened the first phase of its Keystone pipeline. This phase pumps crude oil from Alberta to refineries in Illinois. The second phase extends to Oklahoma, and began operating in February 2011....

PLEASE NOTE: Our next Hotline will go out on Friday, July 8, 2011. SNC-LAVALIN GROUP INC., $58.88, Toronto symbol SNC, rose 9% this week in response to its purchase of certain assets of Atomic Energy of Canada Ltd. from the federal government. The purchase mainly consists of Atomic Energy’s Candu nuclear-reactor division. All of Canada’s reactors use the Candu design and technology. The division has also sold reactors to Argentina, Romania, India, South Korea and China....

ENBRIDGE INC. $31 (Toronto symbol ENB; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 774.3 million; Market cap: $24.0 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.2%; TSINetwork Rating: Above Average; www.enbridge.com) gets 80% of its revenue by operating pipelines that pump crude oil and natural gas from western Canada to eastern Canada and the U.S. The remaining 20% mainly comes from distributing natural gas to 2 million consumers in Ontario, Quebec and parts of New York State. The company is also developing a gas distribution system in New Brunswick.

Big investments should pay off

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PEMBINA PIPELINE CORPORATION $24.55 (Toronto symbol PPL; Shares outstanding: 163.8 million; Market cap: $4.1 billion; TSI Network Rating: Extra Risk; Dividend yield: 6.4%; www.pembina.com) owns nine pipeline systems with a total length of over 8,000 kilometres. These pipelines bring oil and gas from fields in northeastern B.C. and western and northern Alberta to refineries, or feed into major pipelines, such as the Enbridge Pipeline System. It also owns the Syncrude, Horizon and Cheecham pipelines, which pump crude oil from the Alberta oil sands. As well, it holds a 50% stake in the Fort Saskatchewan Ethylene Storage Limited Partnership. It also owns the Cutbank Complex, a network of natural-gas gathering and processing facilities. In the three months ended March 31, 2011, Pembina’s cash flow rose 12%, to $74.5 million, or $0.45 a share, from $66.5 million, or $0.41 a share, a year earlier....

VERESEN INC. $12.83 (Toronto symbol VSN; Shares outstanding: 145.6 million; Market cap: $1.9 billion; TSINetwork Rating: Extra Risk; Dividend yield: 7.8%) is the new name of Fort Chicago Energy Partners L.P. after it converted to a corporation on January 1, 2011. Veresen owns and operates energy pipelines and processing plants across North America. One of its major holdings is a 50% interest in the Alliance natural-gas pipeline, which runs 3,000 kilometres from Fort St. John, B.C., to Chicago. Enbridge Inc. owns the other 50%. Veresen and Enbridge also own 85.4% of the Aux Sable natural gas liquids plant. As well, Veresen owns 100% of the 1,324-kilometre Alberta Ethane Gathering System....

A number of wind power stocks have emerged over the past few years as concern over the environment has grown. However, like many other alternative-energy firms, wind power stocks face significant costs and risks. For example, varying wind speeds cause a wind turbine’s electricity output to fluctuate. In many areas, the wind is stronger in the daytime, when demand is lower, and dies down in the evening, when consumers use more appliances. As well, electrical power can’t be stored efficiently, so to make economic sense it must be used when it is produced. As a result, utilities must maintain back-up power capacity that is equal to their reliance on wind power....

DUNDEE CORP. $12 (Toronto symbol DC.A; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 71.2 million; Market cap: $854.4 million; Price-to-sales ratio: 0.7; No dividends paid; SI Rating: Average) is a holding company with subsidiaries in three main areas: wealth management, real estate and resources. In the three months ended June 30, 2010, Dundee earned $51.2 million, or $0.64 a share. That’s up 71.5% from $29.9 million, or $0.39 a share, a year earlier. In the latest quarter, Dundee realized a $45.7-million gain on the sale of securities. A year earlier, these gains totalled just $120,000. That was the main reason for the higher earnings. Dundee is a hold....

FORT CHICAGO ENERGY PARTNERS L.P. $11.72 (Toronto symbol FCE.UN; Units outstanding: 143.8 million; Market cap: $1.7 billion; SI Rating: Extra Risk; Dividend yield: 8.5%) owns and operates energy pipelines and processing plants across North America. One of its major holdings is a 50% interest in the Alliance natural-gas pipeline, which runs 3,000 kilometres from Fort St. John, B.C., to Chicago. Enbridge Inc. owns the other 50%. Fort Chicago and Enbridge also own 85.4% of the Aux Sable natural gas liquids plant. As well, Fort Chicago owns 100% of the 1,324-kilometre Alberta Ethane Gathering System. In the three months ended June 30, 2010, Fort Chicago’s revenue rose 12.5%, to $168 million from $149.3 million a year earlier. Cash flow per unit rose 17.2%, to $0.34 from $0.29....

TRANSALTA CORP. $21 (Toronto symbol TA; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 218.6 million; Market cap: $4.6 billion; Price-to-sales: ratio: 1.7; Dividend yield: 5.5%; SI Rating: Average) is working on Project Pioneer, which will capture and store carbon emissions from its coal-fired power plants in Alberta. The company plans to sell the reclaimed carbon to oil producers, who would use it to extract more oil. Enbridge Inc. (Toronto symbol ENB) recently agreed to participate in Project Pioneer. Enbridge’s pipeline and carbon-sequestration expertise should help ensure the project’s success. TransAlta is a buy.