enbridge

Enbridge has faced negative media coverage after U.S. regulators criticized it for its response to a 2010 pipeline spill in Michigan. As well, environmentalists and First Nations have objected to its proposed Northern Gateway oil pipeline from Edmonton to Kitimat, B.C. However, its financial strength will let it keep expanding through a number of projects—and raising its dividend. ENBRIDGE INC. $40.50 (Toronto symbol ENB; Shares outstanding: 794.9 million; Market cap: $33.3 billion; TSINetwork Rating: Above Average; Dividend yield: 2.8%; 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 gas to consumers in Ontario, Quebec, New Brunswick and New York State. Enbridge has spent over $12 billion on new growth projects in the past three years. This includes new pipelines to handle rising oil sands and shale gas production. Meanwhile, the company expects to complete another $13 billion in projects by the end of 2015. Additional projects are likely to follow....

TRANSCANADA CORP. $45.95 (Toronto symbol TRP; Shares outstanding: 704.4 million; Market cap: $32.3 billion; TSINetwork Rating: Above Average; Dividend yield: 4.3%; www.transcanada.com) operates 68,500 kilometres of pipelines that pump natural gas in Canada and the U.S. The company also owns or has interests in over 10,800 megawatts of power generation. That includes Bruce Power LP, a nuclear power plant in Ontario. In the three months ended June 30, 2012, TransCanada’s revenue rose slightly, to $1.81 billion from $1.80 billion a year earlier. Earnings per share fell 9.8%, to $0.46 from $0.51, mostly due to the negative impact of lower natural gas and power demand on its operations....

Natural gas prices recently dropped below $2 U.S. per million British thermal units (BTUs), a 10-year low. Prices have since moved up somewhat, to $2.87. Shale gas discoveries continue to increase supply. At the same time, demand is slowing due to the weak global economy. Shale gas is trapped in rock formations. To extract it, producers pump water and chemicals into the rock. This fractures the rock and releases the natural gas. Gas production is also growing as a by-product of drilling for more profitable crude oil and natural gas liquids, such as propane and butane....

PENGROWTH ENERGY CORP., $6.40, Toronto symbol PGF, is cutting its monthly dividend by 42.9%, to $0.04 a share from $0.07, starting with the August 2012 payment. That caused the stock to fall 3% on Friday. Even after the cut, the new annual dividend rate of $0.48 a share still yields 7.5%. The company’s selling prices for oil and natural gas are falling, and it wants to conserve cash for potential acquisitions and investments in promising new projects, such as its Lindbergh oil sands development in Alberta....

ENCANA $20.75 (Toronto symbol ECA; Shares outstanding: 735.4 million; Market cap: $15.3 billion; TSINetwork Rating: Average; Dividend yield: 3.9%; www.encana.com) has come under fire over media reports that the company colluded with U.S.-based Chesapeake Energy Corp. (New York symbol CHK) with regard to various land deals in Michigan in 2009 and 2010. The companies are alleged to have agreed to avoid bidding against each other in order to keep prices of this land low. Now, recent discoveries of shale gas in Michigan have spurred strong demand for these properties for exploration purposes. (Chesapeake Energy is a recommendation of Stock Pickers Digest, our newsletter that focuses on aggressive investing.) Encana is now investigating these allegations, which are also likely to spur a number of class-action lawsuits. However, anti-competitive lawsuits are often difficult to prove....

ISHARES S&P/TSX 60 INDEX FUND $16.65 (Toronto symbol XIU; buy or sell through brokers; ca.ishares.com) is a good, low-fee way to buy the top stocks on the TSX. The units are made up of stocks that represent the S&P/TSX 60 Index, which consists of the 60 largest, most heavily traded stocks on the exchange. Expenses are just 0.17% of assets.

The index mostly consists of high-quality companies. However, as the fund must ensure that all sectors are represented, it holds a few stocks we wouldn’t include.

The index’s top holdings are Royal Bank, 7.2%; TD Bank, 7.0%; Bank of Nova Scotia, 5.9%; Barrick Gold, 4.4%; Suncor Energy, 4.3%; CN Railway, 3.7%; Bank of Montreal, 3.5%; Potash Corp., 3.4%; Goldcorp, 3.3%; BCE Inc., 3.2%; Canadian Natural Resources, 3.2%; Enbridge, 3.1%; TransCanada Corp., 3.0%; CIBC, 2.8%; Cenovus Energy, 2.3%; and Telus Corp., 1.9%.

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MART RESOURCES, $1.36, symbol MMT on Toronto, jumped over 28% this week after the company declared a special dividend of $0.10 a share, payable on August 8, 2012. Mart will then begin paying quarterly dividends of $0.05 a share starting in September 2012. The stock is now up 288.6% since we first recommended it in our May 2010 issue at $0.35. Mart is focused on developing, producing and drilling for oil at its properties in Africa. The company is currently producing oil at its 50%-held Umusadege field in Nigeria....

ENCANA CORP., $20.37, Toronto symbol ECA, continues to produce more oil and natural gas liquids (NGLs), such as ethane, propane and butane. NGLs tend to be priced at the same level as crude oil. The company is shifting toward oil and NGLs because low natural gas prices are cutting profits at its regular gas business, which supplied 95% of its overall production in the first quarter of 2012. Encana does not plan to cut its natural gas production. This week, Encana announced that it will spend an extra $600 million (all amounts except share price in U.S. dollars) on its oil and NGL properties this year. The company had originally planned to spend $2.9 billion on all of its capital projects in 2012....

CANADIAN PACIFIC RAILWAY LTD., $73.54, Toronto symbol CP, has resumed normal operations now that Ottawa has ended an eight-day strike by its locomotive engineers, conductors and yard workers. The strike probably cut CP’s earnings per share by around $0.20 in the second quarter of 2012. The company earned $0.82 a share in the first quarter. At CP’s recent annual meeting, U.S.-based activist investment firm Pershing Square Capital Management, which owns 14.2% of the company, succeeded in replacing seven of CP’s 16 directors with its own nominees....

Most stock markets are down lately due to investor worries about a potential eurozone breakup, sluggish U.S. growth and a slowdown in China. Still, the long-term outlook is positive. One way to profit from a rebound is to add exchange traded funds (ETFs) that track major stock market indexes to your portfolio. ETFs trade on stock exchanges, just like stocks. Prices are quoted in newspaper stock tables and online. You must pay brokerage commissions to buy and sell ETFs, but their low management fees still give them a cost advantage over most mutual funds....