Telus Corp.

TELUS CORP. $70 (Toronto symbol T; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 326.8 million; Market cap: $22.9 billion; Price-to-sales ratio: 2.1; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.telus.com) now gets 54% of its revenue and 62% of its earnings from its 7.7 million wireless subscribers across Canada.

The remaining 46% of Telus’s revenue and 38% of earnings come from its wireline division, which mainly consists of 3.4 million traditional phone customers in B.C., Alberta and eastern Quebec. This business also includes 1.4 million Internet users and 678,000 TV customers.

Telus’s revenue fell 0.5%, from $9.7 billion in 2008 to $9.6 billion in 2009, but rose to $10.9 billion in 2012. Earnings fell 11.5%, from $1.1 billion, or $3.52 a share, in 2008 to $998 million, or $3.14 a share, in 2009. However, earnings rebounded to $1.3 billion, or $4.03 a share, in 2012.
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Telus shares have gained 50% in the past five years, thanks to rising demand for wireless services. About 80% of Canadians now own a cellphone, but there’s still plenty of room for Telus to grow. That’s because many cellphone users are upgrading to smartphones, which generate higher revenue....

BCE INC. $47 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 775.9 million; Market cap: $36.5 billion; Price-to-sales ratio: 1.7; Dividend yield: 5.0%; TSINetwork Rating: Above Average; www.bce.ca), like Telus (see left), continues to benefit from strong demand for wireless and high-speed Internet services....

TELUS $69.31 (Toronto symbol T; Shares outstanding: 326.0 million; Market cap: $22.6 billion; TSINetwork Rating: Above Average; Dividend yield: 3.7%; www.telus.com) will split its common shares on a 2-for-1 basis on April 16, 2013. Following the split, the company will have roughly 653.6 million common shares outstanding.

The split will make Telus’s shares more liquid....

TRANSCONTINENTAL INC., $12.40, Toronto symbol TCL.A, is the largest commercial printer in Canada and the third-largest in North America. It also publishes newspapers and magazines. The company plans to pay a special dividend of $1.00 a share on April 26, 2013, to shareholders of record on April 5. That’s in addition to its regular quarterly payout of $0.145 a share, for a 4.7% annualized yield. Meanwhile, Transcontinental earned $28.5 million in its fiscal 2013 first quarter, which ended January 31, 2013. That’s up 5.2% from $27.1 million a year earlier. Earnings per share rose 12.1%, to $0.37 from $0.33, on fewer shares outstanding....

BANK OF MONTREAL, $64.08, Toronto symbol BMO, reported better-than-expected earnings this week. That’s mainly because stronger results from securities trading and wealth management offset lower earnings from its retail-banking business. In the first quarter of the bank’s 2013 fiscal year, which ended January 31, 2013, its earnings rose 7.1%, to $1.04 billion, or $1.52 a share. These figures exclude unusual items, such as costs to integrate U.S. banking firm Marshall & Ilsley, which Bank of Montreal bought in July 2011. On that basis, the latest earnings beat the consensus estimate of $1.48 a share. A year earlier, Bank of Montreal earned $972 million, or $1.42 a share. Overall revenue fell 0.9%, to $4.08 billion from $4.12 billion. Revenue was unchanged at the Canadian banking business, which supplies 39% of the bank’s overall revenue. Low interest rates continue to attract borrowers, but they also hurt the income that Bank of Montreal earns on its loans. Revenue at its U.S. operations (19% of the total) fell 4.4%, partly due to smaller gains on sales of securities....

TELUS $70.62 (Toronto symbol T; Shares outstanding: 324.9 million; Market cap: $22.9 billion; TSINetwork Rating: Above Average; Dividend yield: 3.6%; www.telus.com) has finished converting its 151 million non-voting class A shares into regular common shares (which have one vote each) on a one-for-one basis.

The move diluted common shareholders’ voting power, but it lets the common shares trade on the New York Stock Exchange (symbol TU)....

ISHARES DOW JONES CANADA SELECT DIVIDEND INDEX FUND $22.24 (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 4.2%.

The fund’s top holdings are CIBC, 6.7%; Bonterra Energy, 6.0%; National Bank, 6.0%; TD Bank, 5.5%; Bank of Montreal, 5.4%; Royal Bank, 4.4%; Telus Corp., 4.4%; Bank of Nova Scotia, 4.1%; BCE Inc., 4.1%; and IGM Financial, 3.9%.

The fund holds 51.5% of its assets in financial stocks. 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 $18.50 (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, 7.8%; TD Bank, 6.7%; Bank of Nova Scotia, 6.0%; Suncor Energy, 4.6%; Bank of Montreal, 3.6%; CN Railway, 3.6%; Potash Corp., 3.3%; Enbridge, 3.1%; Trans- Canada Corp., 3.0%; BCE Inc., 3.0%; CIBC, 2.9%; Canadian Natural Resources, 2.9%; Barrick Gold, 2.9%; Goldcorp, 2.6%; Manulife Financial, 2.3%; Cenovus Energy, 2.2%; and Telus Corp., 1.9%.

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TELUS CORP. (Toronto symbols T $68 and T.A $68; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 326.0 million; Market cap: $22.2 billion; Price-to-sales ratio: 2.0; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www.telus.com) has received court approval for its plan to convert its 151 million non-voting class A shares into regular common shares (which have one vote each) on a one-for-one basis.

The company converted the shares in the U.S. on February 4, 2013. The move dilutes common shareholders’ voting power, but it lets the common shares trade on the New York Stock Exchange (symbol TU). Previously, only the non-voting shares traded on New York. The change should make the common shares more liquid. Telus will make the conversion in Canada on February 11, 2013.

Telus A stock is a buy.

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