enbridge

Exchange traded funds (ETFs) are set up to mirror the performance of a stock market index or sub-index. They hold a more or less fixed selection of securities that represent the holdings that go into the calculation of the index or sub-index. ETFs trade on stock exchanges, just like stocks. That’s different from mutual funds, which you can only buy at the end of the day, at a price that reflects the fund’s value at the close of trading. Prices of ETFs are quoted in newspaper stock tables and online. You pay brokerage commissions to buy and sell them, but their low management fees give them a cost advantage over most mutual funds....

ENBRIDGE INC. $50.81 (Toronto symbol ENB; Shares outstanding: 834.8 million; Market cap: $4242 billion; TSINetwork Rating: Above Average; Dividend yield: 2.8%; www.enbridge.com) has won approval from Ottawa for its Northern Gateway pipeline. The line will pump crude from Alberta’s oil sands to Kitimat, B.C. From there, tankers would ship the oil to customers in Asia. It will cost $7.9 billion to build this project. However, that estimate is sure to rise as other oil sands and pipeline projects drive up labour and material costs....

ENBRIDGE INC. $51 (Toronto symbol ENB; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 834.8 million; Market cap: $42.6 billion; Price-to-sales ratio: 1.2; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.enbridge.com) operates pipelines that pump oil and natural gas from Western Canada to Eastern Canada and the U.S. The company’s pipelines also handle 53% of Canada’s crude oil exports to the U.S.

Pipelines supply 90% of Enbridge’s revenue. The remaining 10% comes from distributing gas to two million consumers in Ontario, Quebec, New Brunswick and New York State.

In the quarter ended March 31, 2014, Enbridge’s revenue jumped 33.2%, to $10.5 billion from $7.9 billion a year earlier, mainly because the company is pumping more crude from the Alberta oil sands.

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ENBRIDGE INC., $51.09, Toronto symbol ENB, has won approval from Ottawa for its Northern Gateway pipeline. Northern Gateway will pump crude from Alberta’s oil sands to Kitimat, B.C. From there, tankers would ship the oil to customers in Asia. It will cost $7.9 billion to build this project. That’s equal to 19% of Enbridge’s $42.7-billion market cap (or the value of all its outstanding shares). However, that estimate is sure to rise as other oil sands and pipeline projects drive up labour and material costs....

Enbridge and TransCanada have risen strongly in recent months. That’s partly because low interest rates continue to encourage income-seeking investors to buy high-yielding utilities.

After their recent gains, both stocks now seem expensive in relation to their earnings....

CANADIAN PACIFIC RAILWAY $190.72 (Toronto symbol CP; Shares o/s: 175.1 million; Market cap: $32.7 billion; TSINetwork Rating: Average; Dividend yield: 0.7%; www.cpr.ca) expects to ship 140,000 to 210,000 carloads of crude oil a year by the end of 2015, up from 90,000 in 2013.

Higher crude shipments and improving efficiency should increase CP’s 2014 earnings by 30% over 2013, to $8.35 a share....

ENBRIDGE INC. $52.89 (Toronto symbol ENB; Shares outstanding: 831.5 million; Market cap: $43.9 billion; TSINetwork Rating: Above Average; Dividend yield: 2.7%; www.enbridge.com) has won approval to export some of the Canadian crude oil it ships into the U.S. to other countries.

Under the license terms, the pipeline operator must separate U.S.-produced oil from Canadian crude. The company expects exports to other markets to account for less than 2% of the volume its U.S. oil pipelines currently handle.

However, shipping oil to refineries in Europe and elsewhere would help producers collect higher prices for their crude. That would encourage them to raise their output, increasing demand for space on Enbridge’s pipelines.

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BANK OF NOVA SCOTIA, $66.78, Toronto symbol BNS, has agreed to buy 20% of the credit card division of CANADIAN TIRE CORP., $111.29, Toronto symbol CTC.A. This business is Canada’s eighth-largest largest credit card issuer, with 1.8 million clients and $4.4 billion in outstanding loans. Its cardholders spend $1.2 billion annually. Bank of Nova Scotia will pay $500 million for this stake, and Canadian Tire has an option to sell an additional 29% to the bank over the next 10 years....

BMO S&P/TSX Laddered Preferred Share Index ETF, $14.48, symbol ZPR on Toronto (Units outstanding: 70.1 million; Market cap: $1.0 billion; www.etfs.bmo.com), holds Canadian floating-rate preferred shares. Issuers include Bank of Montreal, Enbridge, BCE, TransCanada and Canadian Utilities. The ETF’s MER is 0.45%. It currently yields 4.3%. Note that the dividends you receive from this fund do benefit from the Canadian dividend tax credit. Floating-rate preferred shares pay dividends that fluctuate with changes in interest rates. The dividend rate may range from 50% to 100% of (usually) the prime bank rate. As interest rates rise, so do floating-preferred dividend yields....

ENBRIDGE INC. $52.89 (Toronto symbol ENB; Shares outstanding: 831.5 million; Market cap: $43.9 billion; TSINetwork Rating: Above Average; Dividend yield: 2.7%; www.enbridge.com) has won approval to export some of the Canadian crude oil it ships into the U.S....