Toronto-Dominion Bank

Canadian Western Bank, $31.46, symbol CWB on Toronto (Shares outstanding: 78.8 million; Market cap: $2.5 billion; www.cwbank.com), offers business and personal banking services across the four western provinces. It’s the biggest Canadian bank headquartered in western Canada and the country’s eighth-largest. The bank’s wholly owned subsidiaries include National Leasing Group Inc., Canadian Western Trust Company, Valiant Trust Company, Canadian Direct Insurance Inc., Adroit Investment Management Ltd. and Canadian Western Financial Ltd. In the three months ended October 31, 2012, Canadian Western Bank’s earnings rose 19.8%, to $43.0 million from $35.9 million a year earlier. Earnings per share rose 14.6%, to $0.55 from $0.48, on more shares outstanding. Net interest income rose 8.0%, to $111.3 million from $103.1 million. Other income rose 47.8%, to $19.9 million from $13.5 million....

Most stock markets have risen lately. But as always, they remain subject to unexpected downturns. Even so, we feel the long-term outlook is for higher stock prices. One way to profit from rising markets is to add exchange traded funds (ETFs) that track major stock indexes to your portfolio. ETFs trade on stock exchanges, just like stocks. Prices are quoted in newspaper stock tables and online. You must pay brokerage commissions to buy and sell ETFs, but their low management fees still give them a cost advantage over most mutual funds....

Most stock markets have risen lately. But as always, they remain subject to unexpected downturns. Even so, the long-term outlook is for higher stock prices.

One way to profit from rising markets is to add exchange traded funds (ETFs) that track major stock indexes to your portfolio.

ETFs trade on stock exchanges, just like stocks....

AGRIUM INC., $115.36, Toronto symbol AGU, jumped 8% this week after the company increased its earnings forecast for the fourth quarter of 2012. Higher prices for grains and other crops are prompting farmers to apply more fertilizer. As a result, the company now expects to report fourth quarter earnings of slightly more than $2.00 a share (all amounts except share price in U.S. dollars). That’s well above its earlier forecast of $1.50 to $1.90 a share. Activist investment firm Jana Partners LLC continues to pressure Agrium to spin off its retail business as a separate company. Jana owns 6% of Agrium’s shares....

TORONTO-DOMINION BANK $82 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; Shares outstanding: 916.1 million; Market cap: $75.1 billion; Price-to-sales ratio: 2.5; Dividend yield: 3.8%; Stonework Rating: Above Average;www.td.com) recently agreed to buy the U.S. credit card portfolio of retailer Target Corp. (New York symbol TGT). TD will pay an amount equal to these loans’ $5.9-billion U.S. value. In addition, under a new seven-year deal, TD will become the exclusive issuer of Target-branded cards in the U.S.

Meanwhile, the bank earned $7.1 billion (Canadian)in its 2012 fiscal year. That’s up 10.0% from$6.4 billion in fiscal 2011. Because of more shares outstanding, earnings per share rose at a slower pace of 8.2%, to $7.42 from $6.86. Revenue increased6.7%, to $23.1 billion from $21.7 billion.

Earnings at TD’s Canadian retail banking division(which supplies 49% of the bank’s total earnings) rose 11.7% thanks to strong loan demand and the bank’s purchase of MBNA’s Canadian credit card operations. High loan demand also pushed up earnings at the U.S. division (20% of the total) by 12.0%. The wealth management division’s earnings (19%) rose 4.0%. Earnings from securities trading (12%) increased 8.0% as low interest rates prompted businesses to issue more bonds.

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Earnings growth at Canada’s big five banks will probably slow slightly in 2013, as rising debt levels prompt consumers to take out fewer loans.

However, business loan demand should stay steady. As well, the banks’ loan losses continue to fall as more borrowers focus on debt repayment....

CANADIAN PACIFIC RAILWAY LTD. $97.70, Toronto symbol CP, rose 5% this week after the company announced a major restructuring plan aimed at improving its efficiency. CP’s strategy includes cutting 25% of its workforce, making its trains longer and faster, and closing some terminals. CP didn’t say how much these moves would cost. However, the restructuring should help cut its operating ratio from 74.1% to around 65% in 2016. (Operating ratio is calculated by dividing a company’s regular operating costs by its revenue. The lower the ratio, the better.) In addition, CP has suspended its plan to build new rail lines that would have served coal mines in the Powder River Basin in Montana and Wyoming. The company received an exclusive option to build these lines as part of a 2007 acquisition. However, power plants are switching to natural gas, which has hurt demand for coal. As a result, CP will write down this option and related assets by $180 million. That’s equal to 80% of the $224 million, or $1.30 a share, that it earned in the third quarter of 2012....

Olympia Financial Group, $39.25, symbol OLY on Toronto (Shares outstanding: 2.5 million; Market cap: $99.1 million; www.olympiatrust.com), conducts most of its business through its wholly owned Olympia Trust Company subsidiary, which started up in September 1995. Rather than take deposits from customers and then make loans, Olympia Trust acts as a trustee and manages self-administered registered plans. It also acts as a registrar and transfer agent for companies listed on the Toronto stock market and administers employee stock purchase plans for corporations. In addition, Olympia Financial provides other services, such as foreign currency exchange. One of its divisions, Olympia Benefits, sells private health-service plans. Right now, Olympia only operates in Alberta, B.C., Saskatchewan and Manitoba. However, it has been granted a license to operate as a non-deposit-taking trust company in Quebec. That will let it expand its registered-plans and foreign-exchange businesses in that province....

ISHARES DOW JONES CANADA SELECT DIVIDEND INDEX FUND $20.77 (Toronto symbol XDV; buy or sell through brokers; ca.ishares.com) holds 30 of the highest-yielding Canadian stocks. Its selections are based on dividend growth, yield and payout ratio. The weight of any one stock is limited to 10% of its assets. The fund’s MER is 0.50%. It yields 4.6%.

The fund’s top holdings are CIBC, 7.1%; National Bank, 5.8%; TD Bank, 5.6%; Bank of Montreal, 5.3%; Bonterra Energy, 4.8%; Royal Bank, 4.6%; Telus Corp., 4.6%; Bank of Nova Scotia, 4.3%; BCE Inc., 4.1%; and AG Growth International, 4.0%.

The fund holds 54.4% of its assets in financial stocks. Utilities are next, at 21.2%. The top Canadian finance stocks have sound prospects. However, if you invest in this ETF, be sure to adjust the rest of your portfolio so it won’t be overly concentrated in the financial sector.

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ISHARES S&P/TSX 60 INDEX FUND $17.71 (Toronto symbol XIU; buy or sell through brokers; 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.

The index mostly consists of high-quality companies. However, as the fund must ensure that all sectors are represented, it holds a few stocks we wouldn’t include.

The index’s top holdings are Royal Bank, 7.4%; TD Bank, 6.8%; Bank of Nova Scotia, 5.8%; Suncor Energy, 4.5%; Barrick Gold, 3.7%; CN Railway, 3.5%; Bank of Montreal, 3.4%; Potash Corp., 3.3%; Goldcorp, 3.3%; BCE Inc., 3.1%; Canadian Natural Resources, 3.0%; TransCanada Corp., 2.9%; CIBC, 2.8%; Enbridge, 2.8%; Cenovus Energy, 2.4%; and Telus Corp., 1.8%.

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