pension plan

CENOVUS ENERGY $18.66 (Toronto symbol CVE; Shares outstanding: 828.5 million; Market cap: $15.9 billion; TSINetwork Rating: Average; Dividend yield: 5.7%; www.cenovus.com) gets 35% of its revenue from its oil sands projects and conventional oil and gas wells in Western Canada. Refining supplies the remaining 65% of Cenovus’s revenue. The company ships oil to its 50%-owned refineries in Illinois and Texas. Phillips 66 (New York symbol PSX) owns the other 50% of these operations. Cenovus has now agreed to sell its royalty lands to the Ontario Teachers’ Pension Plan for $3.3 billion. The company collects royalties from firms that drill for oil and gas on these properties, which total 4.8 million acres in Alberta, Saskatchewan and Manitoba....

Our view on how Verizon, one of our best dividend stocks in the U.S., aims to hold off its challengers with two takeovers, including AOL.

CENOVUS ENERGY INC., $19.44, Toronto symbol CVE, has agreed to sell its royalty lands to the Ontario Teachers’ Pension Plan. The company collects royalties from firms that drill for oil and gas on these properties, which total 4.8 million acres in Alberta, Saskatchewan and Manitoba. It also gets some of the oil these drillers recover: in the first quarter of 2015, these wells supplied 7,800 barrels a day, or 3.6% of the Cenovus’s daily oil production of 218,020 barrels. Cenovus will receive $3.3 billion when it completes the sale, probably before July 31, 2015. To put that in context, its market cap (or the value of all of its outstanding shares) is $16.1 billion....

In the past few years, Verizon and AT&T have aggressively expanded their wireless and high-speed Internet networks. That has attracted new users and helped offset falling revenue from traditional phones. But new challengers continue to emerge, like low-cost wireless service from Google and video-streaming services like Netflix, which threaten their fibre optic TV offerings. In response, both AT&T and Verizon are buying up companies that should help them compete— and keep raising their dividends....

Most successful investors agree that it’s a good idea to base investment decisions on facts rather than predictions. You can make mistakes with facts, of course, but predictions have a much higher failure rate. However, one little noticed obstacle to investment success is that it’s easy to mix the two up. Perhaps the best example of this is the tobacco industry. Starting a few decades ago, cigarette makers came under relentless attack from government, health authorities and lawsuits. Many investors took it for granted that the industry was doomed. Lots of smokers quit, and this hurt cigarette demand. But the obvious negatives stopped new competitors from entering the industry. Laws against cigarette advertising limited advertising expense for the industry, so profitability rose. Cigarette makers were able to pass the costs of litigation and regulation onto their customers. Meanwhile, tobacco use grew quickly in emerging markets....

VERIZON COMMUNICATIONS INC. $47 (New York symbol VZ, Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 4.1 billion; Market cap: $192.7 billion; Priceto- sales ratio: 1.5; Dividend yield: 4.7%; TSINetwork Rating: Average; www.verizon.com) gets 70% of its revenue and 95% of earnings from its 108.6 million wireless subscribers. The other 30% of revenue and 5% of earnings comes from its wireline business, which serves 19.5 million traditional phone customers and 26.4 million high-speed Internet and digital TV users. In 2014, the company bought the 45% of the Verizon Wireless joint venture it didn’t already own from U.K.-based Vodafone Group (Nasdaq symbol VOD). Verizon Wireless sells wireless services in the U.S.

Verizon paid $130 billion for Vodafone’s stake, including $58.9 billion in cash. It also issued $61.3 billion worth of common shares to Vodafone shareholders and borrowed most of the remaining $9.8 billion.

The Vodafone stake, along with strong wireless demand, boosted the company’s revenue by 19.3%, from $106.6 billion in 2010 to $127.1 billion in 2014. Earnings fell from $0.90 a share (or a total of $2.5 billion) in 2010 to $0.31 a share (or $875 million) in 2012, mainly due to a $7.2-billion charge related to a change in its pension plan accounting policies. Earnings jumped to $4.00 a share (or $11.5 billion) in 2013 but fell to $2.42 a share (or $9.6 billion) in 2014 as the Verizon Wireless purchase added more one-time charges and other operating costs.

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SNC-LAVALIN GROUP INC., $46.40, Toronto symbol SNC, gained 3% this week on speculation that larger engineering firms in Spain and Australia are interested in buying the company. The stock fell to $36.24 in March 2015 after the RCMP laid charges against SNC and two of its subsidiaries for using bribes to win construction contracts in Libya between 2001 and 2011. These are the same allegations that prompted the company to replace its senior executives in 2012 and bring in a new program to enforce ethical practices. SNC plans to fight these charges....

MANITOBA TELECOM $28.10 (Toronto symbol MBT; Shares outstanding: 78.5 million; Market cap: $2.2 billion; TSINetwork Rating: Average; Dividend yield: 4.6%; www.mts.ca) recently completed a strategic review of its operations. As a result, it now plans to cut 25% of the workforce at its Allstream division, which sells telephone, Internet and other communication services to businesses across Canada. The company will also cut Allstream’s capital spending by 20% to 30% in 2015. Manitoba Telecom expects these moves to save it $50 million annually by the end of 2016. In addition, it will contribute $120 million to its underfunded employees’ pension plan, eliminating the need for additional payments over the next two years. The company will also cut its dividend by 23.5%. The new annual rate of $1.30 yields 4.6%....

Replying to an investor seeking stock picks to buy and hold, we assess the long-term prospects of America’s biggest grocery store operator.

Kroger Co., $74.42, symbol KR on New York (Shares outstanding: 491.1 million; Market cap: $36.5 billion; www.kroger.com), started up in 1883 and is now the largest grocery store operator in the U.S. by sales. The company has 2,625 locations (1,330 of which also sell gasoline), mainly in the southern, Midwestern and western U.S. In addition to Kroger, the company’s banners include City Market, Dillons, Food 4 Less, Fred Meyer, Fry’s, Harris Teeter, Jay C, King Soopers, QFC, Ralphs and Smith’s. Kroger’s other operations include 782 convenience stores, 326 jewellery stores and 37 plants that make its private label baked goods and dairy products....