pension plan

Ottawa continues to impose new rules on Canada’s main wireless firms in an effort to encourage more competition. These measures include restricting the new radio frequencies (or spectrum) they can buy, cutting wireless contract terms from three years to two and capping roaming charges.

Meanwhile, new rules will force TV providers to let subscribers buy the channels they want, instead of having to purchase a package.

We feel these leading telecoms will adapt to the changes and keep increasing their earnings and dividends....

TORSTAR $6.54 (Toronto symbol TS.B; Shares outstanding: 79.9 million; Market cap: $462.4 million; TSINetwork Rating: Average; Dividend yield: 8.0%; www.torstar.com) continues to attract the interest of Fairfax Financial (Toronto symbol FFH). Fairfax now owns 22.7% of Torstar’s class B non-voting shares, up from 19.3%. Insiders still control Torstar’s class A voting shares.

Fairfax’s CEO, Prem Watsa, has a reputation as a shrewd investor, and this move draws attention to Torstar’s value. Moreover, rising stock markets have cut the deficit in the company’s pension plan, so it won’t have to contribute as much this year. The extra cash will let it keep paying quarterly dividends of $0.13125 a share, for an 8.0% annualized yield.

Torstar is still a buy.

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TORSTAR $6.54 (Toronto symbol TS.B; Shares outstanding: 79.9 million; Market cap: $462.4 million; TSINetwork Rating: Average; Dividend yield: 8.0%; www.torstar.com) continues to attract the interest of Fairfax Financial (Toronto symbol FFH). Fairfax now owns 22.7% of Torstar’s class B non-voting shares, up from 19.3%....

PRECISION DRILLING CORP., $12.89, Toronto symbol PD, announced two new contracts this week. The first is a multi-year deal with a client in the Middle East to build a Super Triple drilling rig, which can reach deeper pockets of oil and natural gas than Precision’s regular rigs. The company will deliver this rig in the fourth quarter of 2014. The second is a multi-year contract to supply six rigs to a project in Mexico....

GOODYEAR TIRE & RUBBER CO. $26.56 (Nasdaq symbol GT; TSINetwork Rating: Extra Risk) (330-796-2122; www.goodyear.com; Shares outstanding: 248.1 million; Market cap: $6.6 billion; Dividend yield: 0.8%) has risen almost 9% since we made in our #1 pick for 2014 in the last issue.

The gains came after the company reported strong earnings in the latest quarter....

GOODYEAR TIRE & RUBBER, $26.76, symbol GT on New York, is up over 10% after reporting strong earnings yesterday. The company also announced that it has used its rising profits to add $1.15 billion in cash to its U.S. hourly workers’ defined-benefit pension plan. This plan is now fully funded, and Goodyear has started to freeze it. A defined benefit plan is where an employer promises to pay a specified monthly retirement benefit regardless of employee contributions or investment performance. Under its recent four-year contract with its U.S. unions, Goodyear has the right to freeze this plan once it’s fully funded....

BCE INC., $46.58, Toronto symbol BCE, reported higher-than-expected earnings and raised its dividend this week. In the three months ended December 31, 2013, the company’s earnings rose 16.4%, to $540 million, or $0.70 a share. These figures exclude unusual items, such as costs to integrate recently acquired broadcaster Astral Media. On that basis, BCE’s earnings beat the consensus estimate of $0.69 a share. A year earlier, it earned $464 million, or $0.60 a share. Revenue rose 4.3%, to $5.4 billion from $5.2 billion. In addition to Astral’s contribution, the company is attracting more wireless, high-speed Internet and digital TV customers. That’s helping offset lower revenue from traditional phones....

GOODYEAR TIRE & RUBBER CO. $26.56 (Nasdaq symbol GT; TSINetwork Rating: Extra Risk) (330-796-2122; www.goodyear.com; Shares outstanding: 248.1 million; Market cap: $6.6 billion; Dividend yield: 0.8%) has risen almost 9% since we made in our #1 pick for 2014 in the last issue.

The gains came after the company reported strong earnings in the latest quarter. It also announced that it has used its rising profits to add $1.15 billion in cash to its U.S. hourly workers’ defined -benefit pension plan. This plan is now fully funded.

In the quarter ended December 31, 2013, lower North American sales and a stronger U.S. dollar cut Goodyear’s overall sales by 5.0%, to $4.8 billion from $5.0 billion a year earlier.
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Pat McKeough responds to many requests from members of his Inner Circle for specific stock tips as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle....

Pat McKeough responds to many requests from members of his Inner Circle for specific advice on specific stocks and other investments as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle....