enbridge

EMERA INC. $33 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 121.8 million; Market cap: $4.0 billion; Price-to-sales ratio: 1.3; Dividend yield: 4.1%; TSINetwork Rating: Average; www.emera.com) gets 70% of its revenue from Nova Scotia Power Inc., which is Nova Scotia’s main electrical-power supplier. It gets the rest comes from its interests in pipelines and power companies in the U.S. and Caribbean. Emera’s regulated businesses provide over 80% of its earnings. That gives it plenty of steady cash flows for dividends: Emera recently raised its quarterly dividend by 3.8%, to $0.3375 a share from $0.325. The new annual rate of $1.35 yields 4.1%. Emera is a buy....

ISHARES S&P/TSX 60 INDEX FUND $16.56 (Toronto symbol XIU; buy or sell through a broker; 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. Most of the stocks in the index are high-quality companies. However, as it must ensure that all sectors are represented, it holds a few we wouldn’t include. The index’s top holdings are Royal Bank, 6.7%; TD Bank, 6.4%; Bank of Nova Scotia, 5.5%; Barrick Gold, 4.8%; Suncor Energy, 4.1%; Potash Corp., 3.9%; Goldcorp, 3.8%; Bank of Montreal, 3.7%; Canadian Natural Resources, 3.2%; CN Railway, 3.2%; BCE Inc., 3.0%, TransCanada Corp., 2.9%, CIBC, 2.9%; Enbridge, 2.6%; Cenovus Energy, 2.3% and Manulife Financial, 2.1%....

PRECISION DRILLING CORP., $9.54, Toronto symbol PD, sells contract-drilling services to oil and natural-gas producers. Precision owns 360 drilling rigs in Canada, the U.S. and Mexico. The company continues to see strong demand for its Super Series horizontal-drilling rigs. Horizontal drilling involves drilling development wells sideways or at an angle to reach isolated pockets of oil or gas, or to follow a reservoir spread out in a narrow layer. Horizontal drilling works well in situations where conventional drilling is either impossible or too expensive. This week, Precision announced that it will build eight more Super Series rigs. That brings the total number of Super Series rigs it will build this year up to 38. Precision expects to deliver 18 of these rigs in 2011, and the remaining 20 in 2012. Customers have already signed long-term contracts for these rigs. That cuts the risk of these investments....

Exchange-traded funds (ETFs) may have a place in your portfolio. That’s because, unlike many other financial innovations, they don’t load you up with heavy management fees, or tie you down with high redemption charges if you decide to get out of them. Instead, they give you a low-cost, flexible, convenient alternative to mutual funds. ETFs trade on stock exchanges, just like stocks. Prices are quoted in newspaper stock tables and online. You’ll have to pay brokerage commissions to buy and sell ETFs. However, ETFs’ low management fees still give them a cost advantage over most conventional mutual funds. As well, shares are only added or removed when the underlying index changes. As a result of this low turnover, you won’t incur the regular capital-gains bills generated by the yearly distributions most conventional mutual funds pay out to unitholders. Below, we update our advice on six ETFs — five buys and one we don’t recommend....

RESEARCH IN MOTION LTD., $21.36, Toronto symbol RIM, rose earlier this week on speculation that activist investor Carl Icahn is planning to buy a stake in the company.

Mr. Icahn has a long history of pushing companies to make changes that help increase shareholder value. In RIM’s case, that may involve splitting the company into two separate firms. One would sell BlackBerry smartphones and email servers to corporate clients, and the other would focus on consumer products. Icahn may also push RIM to increase its earnings by licensing more of its wireless technology patents.

The company’s two co-founders own 11% of the outstanding shares. That would hinder any radical changes. Still, Mr. Icahn’s involvement would draw investor attention to RIM’s value.

...

RESEARCH IN MOTION LTD., $23.50, Toronto symbol RIM, reported lower than-expected revenue and earnings, mainly because demand for the company’s older BlackBerry smartphones has slowed as it launches newer models. That caused the stock to fall 20% on Friday.

In RIM’s second quarter, which ended August 27, 2011, revenue fell 9.8%, to $4.2 billion from $4.6 billion a year earlier (all amounts except share price in U.S. dollars). That fell short of the consensus revenue estimate of $4.5 billion.

Earnings fell 58.7%, to $329 million, or $0.63 a share, from $797 million, or $1.46 a share. The company is cutting roughly 10% of its workforce as it streamlines its operations. If you exclude severance payments and related costs, RIM would have earned $419 million, or $0.80 a share, in the latest quarter. On this basis, the latest earnings missed the consensus estimate of $0.89 a share.

...

CANADIAN PACIFIC RAILWAY LTD. $55 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 169.4 million; Market cap: $9.3 billion; Price-to-sales ratio: 1.9; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.cpr.ca) transports freight between Montreal and Vancouver. It also connects with hubs in the U.S. Midwest and Northeast. CP gets 25% of its revenue from the U.S. In 2010, CP got 28% of its revenue by hauling shipping containers that contain a variety of goods. Another 23% of its revenue came from hauling grain, followed by consumer and industrial products (19%), coal (10%), fertilizers (10%), automotive products (6%) and forest products (4%). CP’s revenue rose 16.7%, from $4.6 billion in 2006 to $5.3 billion in 2008, as increasing trade with Asia pushed up freight volumes. CP’s 2008 purchase of Dakota, Minnesota & Eastern Railroad Corp. (DM&E) for $1.5 billion also added to its revenue. DM&E operates a 4,000-kilometre rail network in eight midwestern states....

CP’s earnings have suffered lately, mainly due to bad weather. Avalanches during the winter disrupted its operations in western Canada, and spring floods washed out some of its lines in the Canadian Prairies and the U.S. Midwest. However, these are short-term setbacks. As well, the company is now working on a number of improvements that should make it more efficient, and push up its profits. CP’s upgrades mainly include improving its tracks and expanding its loading facilities so they can handle longer trains. That will extend the lives of CP’s locomotives, because they will have to make fewer stops and starts. These improvements will also help the company profit as shipping volumes rise....

ENBRIDGE INC. $32 (Toronto symbol ENB; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 776.4 million; Market cap: $24.8 billion; Price-to-sales ratio: 1.4; Dividend yield: 3.1%; TSINetwork Rating: Above Average; www.enbridge.com) continues to win support from shippers for its proposed Northern Gateway pipeline, which would pump crude oil from Edmonton to a storage terminal in Kitimat, B.C. From there, the oil would be loaded onto tankers and shipped to Asia. Oil-sands operators have already pledged $100 million to the pipeline, which could cost $5.5 billion to build. Northern Gateway still faces strong opposition from environmentalists and Aboriginal groups, but if regulators approve, it could begin operating in 2017. Enbridge is a buy.

PEMBINA PIPELINE CORPORATION $25.49 (Toronto symbol PPL; Shares outstanding: 165.7 million; Market cap: $4.3 billion; TSI Network Rating: Extra Risk; Dividend yield: 6.1%; www.pembina.com) owns nine pipeline systems with a total length of over 8,000 kilometres. These pipelines pump oil and gas from fields in B.C. and Alberta to refineries, or feed into major pipelines, such as the Enbridge Pipeline System. Pembina also owns the Syncrude, Horizon and Cheecham pipelines, which pump crude oil from the Alberta oil sands. In addition, the company 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 June 30, 2011, Pembina’s cash flow rose 42.8%, to $83.1 million, or $0.50 a share, from $58.2 million, or $0.36 a share, a year earlier. That’s because producers shipped more oil and gas through Pembina’s pipelines....