Toronto-Dominion Bank

TECK RESOURCES LTD., $43.77, Toronto symbol TCK.B, earned a record $908 million in the three months ended March 31, 2010. That’s up 276.8% from $241 million a year earlier. Earnings per share rose 206.0%, to $1.53 from $0.50, on more shares outstanding. One-time items, including the sale of two gold mines in Turkey and a one-third interest in a B.C. hydroelectric dam, boosted the company’s earnings in the latest quarter. Without one-time items, Teck’s earnings would have fallen 4.2%, to $205 million from $214 million. Teck’s cash flow per share fell 42.5%, to $0.70 from $1.22. However, its revenue rose 13.8%, to $1.9 billion from $1.7 billion, largely because of rising copper prices....

Exchange-traded funds (ETFs) are one of the more benign financial innovations to come along in the past few years. ETFs are set up to mirror the performance of a stock-market index or sub-index. They hold a more-or-less fixed selection of securities that represent the holdings that go into the calculation of the index or sub-index. ETFs trade on stock exchanges, just like stocks. Investors can buy them on margin or sell them short. The best ETFs offer well diversified, tax-efficient portfolios with exceptionally low management fees....

Exchange-traded funds (ETFs) may have a place in your portfolio. That’s because, unlike many other financial innovations, they don’t load you up with heavy management fees, or tie you down with high redemption charges if you decide to get out of them. Instead, they give you a low-cost, flexible, convenient alternative to mutual funds. ETFs trade on stock exchanges, just like stocks. Prices are quoted in newspaper stock tables and online. You’ll have to pay brokerage commissions to buy and sell ETFs, but you will quickly make these back because of the low management fees. Shares are only added or removed when the underlying index changes. As a result of this low turnover, you won’t incur the regular capital-gains bills generated by the yearly distributions most conventional mutual funds pay out to unitholders....

Dividend 15 Split Corp., $11.69, symbol DFN on Toronto (Shares outstanding: 11.2 million; Market cap: $131.2 million), is a split-share investment corporation that holds shares of 15 companies: BCE Inc., CI Financial Corporation, AGF Management, TransAlta Corporation, SunLife Financial, Canadian Imperial Bank of Commerce, TransCanada Corporation, Manulife Financial, TD Bank, TMX Group, Royal Bank of Canada, Loblaw, Bank of Montreal, Telus Corporation and Enbridge. The company can also invest up to 15% of its portfolio in other equity issues. 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)....

ISHARES DIVIDEND INDEX FUND $18.40 (Toronto symbol XDV; buy or sell through a broker) holds the 30 highest-yielding Canadian stocks based on dividend growth, yield and average payout ratio. The weight of any one stock is limited to 10% of of the fund’s assets. The fund’s MER is 0.50%. iShares Dividend Index Fund has a 3.7% yield. Top holdings are CIBC, 7.3%; Bank of Montreal, 6.3%; Manitoba Tel, 5.7%; National Bank, 5.5%; TD Bank, 5.3%; IGM Financial, 4.5%; Royal Bank, 4.4%; Bank of Nova Scotia, 4.3%; Telus, 4.2%; Sun Life, 3.6%; Power Financial, 3.4%; and TransCanada Corp., 3.4%....

MDS INC., $8.30, Toronto symbol MDS, hopes to complete the sale of its MDS Analytical Technologies business by the end of January. This division makes mass spectrometers that detect and measure substances in blood and other patient samples. The sale will generate $650 million for MDS (all amounts except share price in U.S. dollars). It will use $400 million to $450 million of these funds to buy back shares. MDS is still looking to sell its pharma-services division, which conducts contract-drug research for pharmaceutical companies. When it does sell, MDS will probably use the proceeds for more share buybacks....

TORONTO-DOMINION BANK $64 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; Shares outstanding: 858.8 million; Market cap: $55.0 billion; Price-to-sales ratio: 2.2; Dividend yield: 3.8%; SI Rating: Above Average) is the second-largest Canadian bank, with total assets of $557.2 billion. TD has now fully integrated Commerce Bancorp Inc. with its other U.S. banking operations. The bank paid $8.5 billion for Commerce in May 2008. It now operates as “TD Bank,” and has 1,028 branches from Maine to Florida. The U.S. banking business provides 16% of TD’s overall profits. If you include $276-million in integration costs and $576-million of writedowns of securities, TD’s earnings in the year ended October 31, 2009, fell 18.6%, to $3.1 billion from $3.8 billion in the prior year. Earnings per share fell 28.7%, to $3.47 from $4.87, on more shares outstanding. Revenue rose 21.8%, to $17.9 billion from $14.7 billion, as low interest rates spurred strong demand for new loans....

Things are going well for Canada’s big five banks. Low interest rates continue to spur strong demand for new loans. As well, loan defaults should fall as the economy improves. Despite strong gains in their stock prices since last March’s lows, all five continue to trade at attractive multiples to earnings. Canadian and international banking regulators are working on new rules that will help the global banking industry avoid another credit crisis. In response, Canada’s banks are prudently conserving their cash instead of raising dividends. We feel the banks will resume their pattern of annual dividend hikes when the new rules take effect in 2011. Every investor should aim to hold at least two banks in the Finance segment of their portfolio. Bank of Nova Scotia, which has a strong presence in fast-growing regions, such as Asia and Latin America, remains our favourite for new buying....

TORONTO-DOMINION BANK, $65.33, Toronto symbol TD, had to set aside more funds to cover bad loans in its latest fiscal year. However, the bank still reported higher earnings, as low interest rates spurred strong demand for new loans. TD earned $4.7 billion in the year ended October 31, 2009. That’s up 23.7% from $3.8 billion in the prior year. Earnings per share rose 9.6%, to $5.35 from $4.88, on more shares outstanding. These figures exclude several unusual items, including writedowns of securities the bank holds, and costs to integrate U.S.-based Commerce Bancorp, which TD bought last year. On that basis, the latest earnings beat the $5.07 a share that analysts were expecting. Loan-loss provisions jumped 133.3%, to $2.5 billion from $1.1 billion. Revenue rose 21.8%, to $17.9 billion from $14.7 billion....

BMO DIVIDEND FUND $41.10 (BMO Mutual Funds, 77 King Street West, Suite 4200, Royal Trust Tower, Toronto, Ont., M5K 1J5, Tel: 1-800-665-7700; Web site: www.bmo.com. No load — deal directly with the bank) (CWA Rating: Conservative) holds about 48.5% of its portfolio in the Finance sector. The fund’s next-largest sectors are Energy (23.4%), Consumer Discretionary (5.9%) and Materials (5.0%). The $3.9-billion BMO Dividend Fund’s largest stock holdings are Bank of Nova Scotia, CIBC, Royal Bank, Suncor Energy, Manulife Financial, Toronto-Dominion Bank, TransCanada Corporation, EnCana Corporation, Enbridge and Goldcorp. The fund’s MER is 1.71%....