enbridge

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....

Claymore Investments, Inc., is the wholly owned Canadian subsidiary of Chicago-based Guggenheim Partners. The Canadian branch now offers 29 exchange-traded funds (ETFs) that trade on the Toronto exchange. All of the funds aim to combine what Claymore sees as the advantages of passive investment in an index, along with active management to eliminate stocks from the index that it expects to perform poorly. The funds use a variety of mathematically formulated models, or quantitative investment methodologies. The managers see this as a systematic approach to equity selection, portfolio monitoring and portfolio management....

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....

Brompton Equity Split Corp., $12.97, symbol BE on Toronto (Shares outstanding: 1.7 million; Market cap: $21.9 million; www.bromptongroup.com) mainly invests in large-cap Canadian stocks. The fund was scheduled to wind up on May 31, 2011. However, it now plans to merge with Dividend Growth Split Corp., $9.21, symbol DGS on Toronto (Shares outstanding: 4.3 million; Market cap: $40.0 million; www.bromptongroup.com), on May 18, 2011. The new Dividend Growth Split Corp., symbol DGS on Toronto, will have a termination date of November 30, 2019....

Dividend 15 Split Corp., $12.30, symbol DFN on Toronto (Shares outstanding: 13.6 million; Market cap: $167.3 million; www.dividend15.com), is a split-share investment corporation that holds shares of 15 companies: BCE Inc., CI Financial Corporation, Bank of Nova Scotia, Thomson Reuters, National Bank of Canada, TransAlta Corporation, Sun Life Financial, Canadian Imperial Bank of Commerce, TransCanada Corporation, Manulife Financial, TD Bank, Royal Bank of Canada, Bank of Montreal, Telus Corporation and Enbridge. The company can also invest up to 15% of its portfolio in other stocks. Dividend 15 Split Corp. has two share classes: Dividend 15 Split Corp. capital shares (Toronto symbol DFN), and Dividend 15 Split Corp. preferred shares (Toronto symbol DFN.PR.A)....

Cenovus Energy Inc., symbol CVE on Toronto, operates three oil-sands properties in Alberta, and one in Saskatchewan. Cenovus ships the heavy bitumen from these projects to refineries in Illinois and Texas. ConocoPhillips (New York symbol COP) owns 50% of these refineries, as well as 50% of Cenovus’ two main oil-sands projects. Cenovus also owns conventional oil and natural gas properties. Cenovus split off from EnCana Corp. in December 2009. In 2010, Cenovus earned $993.0 million, or $1.32 a share. That’s up 21.4% from $818.0 million, or $1.09 a share, in 2009. The oil stock’s production rose, as did oil prices. These were the main reasons for the higher earnings. These gains were somewhat offset by higher costs for shipping oil due to problems along the Enbridge pipeline system, and costs to upgrade its U.S. refineries. The oil stock’s cash flow fell 15.1% in 2010, to $2.4 billion, or $3.21 a share, from $2.8 billion, or $3.79 a share in 2009. Lower volumes and selling prices for natural gas were the main reasons for the declines....

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....

SCITI Trust, $13.53, symbol SIN.UN on Toronto, (Shares outstanding: 15.3 million; Market cap: $206.8 million; www.scotiamanagedcompanies.com) first issued units at $10, and began trading on Toronto in April 2003. It was scheduled to wind up on April 29, 2008. However, unitholders voted in March 2008 to continue the trust. SCITI Trust is now scheduled to wind up on August 13, 2013. Unitholders also voted to change the trust’s investment mandate. Previously, SCITI Trust’s portfolio consisted of the 100 largest income trusts by market capitalization included in the Scotia Capital Income Trust Index. The trust’s portfolio is now based on a new index, the Scotia Capital High Yielding Equity Index (the “Scotia HYE Index”). This index tracks the highest-yielding stocks and income trusts on the Toronto exchange. The trust now holds the top 50 highest-yielding issues in the Scotia HYE Index, on an equal-weight basis....

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....