royal bank

Horizons AlphaPro Managed S&P/TSX 60 ETF, $8.33, symbol HAX on Toronto (Shares outstanding: 960,000; Market cap: $8.0 million), invests in stocks in the S&P/TSX 60 index using research based on technical, cyclical and sentiment indicators provided by Ron Meisels of Phases & Cycles Inc. Meisels contributes a weekly column, called “What the Charts Say” to The Globe & Mail. His research may include moving averages, trend lines, volumes, price patterns and point-and-figure charts. The ETF began trading on Toronto at $9.80 a unit on January 7, 2009. The ETF’s recent top-10 holdings were EnCana Corp. (6.8%), Research in Motion (6.3%), Barrick Gold (6%), Potash Corp. of Saskatchewan (5.2%), Goldcorp (4.5%), Canadian Natural Resources (4.3%), Suncor Energy (3.8%), Rogers Communications (3.7%), TransCanada Corp. (3.2%) and Royal Bank of Canada (2.9%). These holdings gave the ETF this sector breakdown: energy (24.1%), gold (16.2%), financials (13.3%), materials, excluding gold (10.3%), industrials (6.7%), information technology (6.3%), utilities (6.4%), cash (6%), telecommunications (3.7%), consumer discretionary (3.4%), consumer staples (2.6%) and health care (1%)....

ROYAL BANK OF CANADA $30 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.3 billion; Market cap: $39 billion; Price-to-sales ratio: 1.4; SI Rating: Above Average) is Canada’s largest bank, with total assets of $723.9 billion. Royal continues to expand its operations in the United States. These now account for 17% of its revenue, and have increased Royal’s exposure to the struggling U.S. housing market. In the fiscal year ended October 31, 2008, earnings declined 17.1%, to $4.6 billion from $5.5 billion in the prior year. Earnings per share fell 19.3%, to $3.38 from $4.19 on more shares outstanding. The drop was largely due to a 101.6% increase in loan-loss provisions. Troubled loans now account for 0.96% of total loans, up from 0.45% a year earlier....

Canada’s banking industry is still healthy despite the problems caused by the worldwide credit crisis. Most of the big five banks have also issued new preferred and common shares in the past few months. The extra funds put them in a good position to make timely acquisitions and keep paying above-average dividends. ROYAL BANK OF CANADA $30 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.3 billion; Market cap: $39 billion; Price-to-sales ratio: 1.4; SI Rating: Above Average) is Canada’s largest bank, with total assets of $723.9 billion. Royal continues to expand its operations in the United States. These now account for 17% of its revenue, and have increased Royal’s exposure to the struggling U.S. housing market....

BANK OF NOVA SCOTIA 6.25% SERIES 26 PREFERREDS $24.90 (Toronto symbol BNS.PR.T) pay quarterly dividends at a rate of $1.5625 annually and have a current yield of 6.28%. Dividends are paid in April, July, October and January. Like most Canadian financial institutions, Bank of Nova Scotia’s preferred dividends are non-cumulative. That’s because it’s more advantageous for banks to classify their preferred shares as subordinate capital, which is capital that ranks after the banks’ deposits and gives them more financial flexibility in a difficult economy. Non-cumulative preferred shares meet this test, as dividends are suspendable without penalty. Of course, this means less security for preferred shareholders. However, the risk of banks halting preferred dividends is extremely remote....

OILEXCO $0.08 (Toronto symbol OIL; SI Rating: Speculative) (403-262-5441; www.oilexco.com; Shares outstanding: 223.8 million; Market cap: $17.9 million) recently announced that its UK Oilexco North Sea subsidiary intends to file for bankruptcy protection. The UK subsidiary holds almost all of Oilexco’s assets. In December 2008, The Royal Bank of Scotland, Oilexco’s main lender, provided $47.5 million U.S. in bridge financing that was due January 31, 2009. This gave Oilexco just over a month to restructure. However, Oilexco said that it needed incremental short-term financing in addition to the bridge loan. In late December 2008, The Royal Bank of Scotland informed Oilexco that lenders were not prepared to provide any further financing, prompting the bankruptcy petition. Petro-Canada, BG Group plc and Talisman Energy have reportedly expressed interest in some of Oilexco’s assets. However, after seeking bankruptcy protection, Oilexco’s assets are likely to be sold at discount prices, leaving little for shareholders....

OILEXCO INC., $0.19, symbol OIL on Toronto, announced last week that its UK subsidiary Oilexco North Sea Ltd. intends to file for bankruptcy protection. The UK subsidiary holds almost all of Oilexco’s assets. In December, 2008, The Royal Bank of Scotland, Oilexco’s main lender, provided $47.5 million U.S. in bridge-financing due January 31, 2009. That provided Oilexco with just over a month to restructure. However, Oilexco said that it needed incremental short-term financing in addition to the bridge loan. In late December, 2008, the Royal Bank of Scotland informed Oilexco that lenders were not prepared to provide any further financing, prompting the bankruptcy petition. Petro-Canada, BG Group plc and Talisman Energy have reportedly expressed interest in some of Oilexco’s assets. However, after seeking bankruptcy protection, Oilexco’s assets are likely to be sold at discount prices, leaving little for shareholders....

ISHARES DIVIDEND INDEX FUND $14.89 (Toronto symbol XDV; buy or sell through a broker) currently holds the 30 highest yielding Canadian stocks. Stocks are included in the index based on their dividend growth, yield and average payout ratio. The weight of any one stock in the fund is limited to 10% of the fund’s assets. Its MER is 0.50%. The fund now yields 5.2%. The fund’s top holdings are: CIBC at 7.6%; Bank of Montreal, 6.4%; National Bank, 6.1%; Manitoba Telecom at 5.6%; TD Bank, 5.5%; IGM Financial, 4.8%; Bank of Nova Scotia, 4.4%; Royal Bank, 4.3%; Russel Metals, 4.3%; Telus Corp., 4.1%, TMX Group, 3.5%; and Sun Life Financial, 3.4%....

BMO DIVIDEND FUND $34.97 (BMO Mutual Funds, 77 King Street West, Suite 4200, Royal Trust Tower, Toronto, Ont., M5K 1J5, 1-800-665-7700; Web site: www.bmo.com. No load — deal directly with the bank) (CWA Rating: Conservative) currently holds about 35.1% of its portfolio in the Financial services industry. Its next-largest holding is Energy at 21.1%. The $3.7 billion BMO Dividend Fund’s largest holdings are Manulife Financial, Bank of Nova Scotia, CIBC, Royal Bank, Shoppers Drug Mart, TD Bank, TransCanada Corp., EnCana, Enbridge and Shaw Communications. The fund’s MER is 1.71%. Over the five years to November 30, 2008, the fund posted a 4.6% annual rate of return. The S&P/TSX gained 5.7% annually, but that was largely due to the big run up in resources prices that lasted until early in 2008. The S&P/TSX index holds a high 40% or so of its holdings in Resources stocks....

BCE INC. $21.23, Toronto symbol BCE, has confirmed that its $42.75-a-share takeover by a private consortium led by the Ontario Teachers’ Pension Plan will not proceed. The deal required auditing firm KPMG to provide an opinion on BCE’s solvency following the takeover. KPMG concluded that BCE would fail this test. BCE disagreed with KPMG’s assessment, and hired a second auditing firm, PricewaterhouseCoopers, to help it address specific items in KPMG’s report. However, KPMG did not change its opinion, and the deal died....

FIDELITY CANADIAN LARGE CAP FUND $17.11 (CWA Rating: Conservative) (Fidelity Investments Canada, 483 Bay St., Suite 200, Toronto, Ont. M5G 2N7. 1-800-263-4077; Web site: www.fidelity.ca. Load fund — available from brokers) invests mostly in large-sized firms like those on the S&P/TSX Index, although it may also invest in small and mid-cap stocks. The top holdings of the $339.9 million Fidelity Canadian Large Cap Fund are Royal Bank of Canada, Suncor Energy, Manulife Financial, Canadian Natural Resources, Potash Corporation of Saskatchewan, Research in Motion, EnCana Corp., Bank of Nova Scotia, Barrick Gold and TD Bank. Fidelity Canadian Large Cap Fund’s one-year loss is 27.0%, compared to a loss of 31.4% for the S&P/TSX Index. The fund has averaged 7.8% annually for the last five years....