telus

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. However, ETFs’ low management fees still give them a cost advantage over most conventional mutual funds. As well, 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....

TORSTAR CORP. $14 (Toronto symbol TS.B; Shares outstanding: 78.9 million; Market cap: $1.1 billion; TSINetwork Rating: Above Average; Dividend yield: 2.6%; www.torstar.com) continues to benefit from the deep cost cuts it made over the past few years in response to slowing advertising and circulation revenue at its newspapers. As a result, Torstar’s earnings rose 70.9% in 2010, to $60.9 million, or $0.76 a share. It earned $35.6 million, or $0.45 a share, in 2009. If you exclude losses from Torstar’s 20% investment in CTVglobemedia, earnings per share would have risen 67.6%, to $1.14 from $0.68. (Privately held CTVglobemedia owns the CTV Television Network, 30 specialty channels and 34 radio stations.) On this basis, the 2010 earnings beat the consensus estimate of $1.13 a share. Revenue rose 1.9%, to $1.48 billion from $1.45 billion. Revenue at Torstar’s newspapers and web sites (68% of its 2010 revenue) rose 5.6%. However, revenue from its Harlequin book-publishing subsidiary (32% of revenue) fell 5.1%. That’s mainly because Harlequin sells most of its products outside Canada, and the strong Canadian dollar lowers the value of its overseas sales. If you exclude the impact of exchange rates and an acquisition by Harlequin, Torstar’s overall revenue rose 3.3% in 2010....

Telus Corp., symbol T.A on Toronto, provides telephone services in B.C., Alberta and eastern Quebec. It also sells wireless services across Canada. In 2010, the dividend paying stock’s sales rose 1.8%, to $9.8 billion from $9.6 billion in 2009. Sales in the company’s wireless division rose 6.6%, and the wireline division’s sales fell 2.2%. Overall, Telus added 378,000 customers in 2010, bringing the total to 12.3 million. That figure includes 7.0 million wireless subscribers, 3.7 million wireline access lines, 1.2 million Internet subscribers and 314,000 “Optik TV” customers. (Optik TV is an Internet-based television service that operates through phone lines.)...

TELUS CORP. $47.65 (Toronto symbol T.A; Shares outstanding: 320.7 million; Market cap: $15.6 billion; TSINetwork Rating: Above Average; Dividend yield: 4.2%; www.telus.com) is Canada’s second-largest telephone company, after BCE Inc. Telus has 6.9 million wireless subscribers across Canada. Its traditional phone business has 3.8 million customers in B.C., Alberta and eastern Quebec. Telus also has 1.2 million Internet subscribers. Its new “Telus TV” service, which operates through phone lines, has just 266,000 subscribers. In the three months ended September 30, 2010, Telus’ earnings rose 6.0%, to $0.89 a share from $0.84 a year earlier. The company earned higher profits from wireless and Internet services. That offset a decline in local and long-distance customers. Telus gets 51% of its earnings from wireless. It added 53,000 wireless subscribers in the latest quarter, up 22.4%. High-profit-margin smartphones account for 28% of its wireless subscribers, up from 18%....

Telus’ focus on the expanding, but highly competitive wireless market gives it a narrower base of business than BCE. That risk is reflected in Telus’ higher p/e and lower yield. Telus is still a buy, but BCE is the more conservative choice. TELUS CORP. $47.65 (Toronto symbol T.A; Shares outstanding: 320.7 million; Market cap: $15.6 billion; TSINetwork Rating: Above Average; Dividend yield: 4.2%; www.telus.com) is Canada’s second-largest telephone company, after BCE Inc. Telus has 6.9 million wireless subscribers across Canada. Its traditional phone business has 3.8 million customers in B.C., Alberta and eastern Quebec. Telus also has 1.2 million Internet subscribers. Its new “Telus TV” service, which operates through phone lines, has just 266,000 subscribers. In the three months ended September 30, 2010, Telus’ earnings rose 6.0%, to $0.89 a share from $0.84 a year earlier. The company earned higher profits from wireless and Internet services. That offset a decline in local and long-distance customers....

Investors are paying more attention to dividend yields (a company’s total annual dividends paid per share divided by the current stock price) as stock markets continue to recover. Companies are responding by doing their best to maintain, or even increase, their dividend payments. That’s good news for investors, because dividends are more dependable than capital gains as a source of income. A couple of decades ago, you could assume that dividends would contribute up to a third of your long-term investment returns, without even considering the tax-cutting effects of the dividend tax credit. Earlier in this decade, dividend yields were generally too low to provide a third of investment returns. But now that yields have moved up and interest rates have moved down, it’s realistic to assume they will once again contribute as much as a third of your total return....

TELUS CORP. $43.80 (Toronto symbol T.A; Shares outstanding: 335.6 million; Market cap: $14.7 billion; TSINetwork Rating: Above Average; Dividend yield: 4.8%; www.telus.com) expects its revenue to rise between 1% and 4% in 2011. As well, its earnings per share should rise 9% to 22%, to between $3.50 and $3.90. The stock now trades at 11.8 times the midpoint of that range. The gains will mainly come from Telus’ recently upgraded wireless and high-speed Internet networks. That’s helping the company attract new customers and deal with new competitors in Canada’s wireless market. Telus is still a buy....

Riverbed Technology Inc., $37.26, symbol RVBD on Nasdaq (Shares outstanding: 73.5 million; Market cap: $2.7 billion, www.riverbed.com), is a leader in wide area network (WAN) optimization. As more workers move outside the office and computer users increasingly access remote datacenters, programs and data that were initially intended for local area networks (LAN) are being slowed down by WAN connections, which have less bandwidth capacity. Riverbed’s products aim to improve the performance of programs, and increase data transmission speed across networks, while lowering the need to add new hardware. Riverbed’s sales and profits are rising. Most important, it’s making sales to large, well-established customers in a range of industries....

PLEASE NOTE: This is our last Hotline for 2010. Our next Hotline will go out on Friday, January 7, 2011. BANK OF MONTREAL, $58.00, Toronto symbol BMO, fell 6% on Friday after it agreed to buy Marshall & Ilsley Corp. (New York symbol MI), which provides banking and financial services through 374 branches in Wisconsin, Indiana, Missouri, Minnesota, Kansas, Arizona and Florida. The purchase doubles the size of Bank of Montreal’s U.S. retail-banking division. The bank is paying roughly $4.1 billion U.S. in stock for Marshall & Ilsley. That’s equal to 12% of Bank of Montreal’s $32.9-billion market cap. It aims to complete the purchase by July 31, 2011....

Shaw Communications, $20.70, symbol SJR.B on Toronto (Shares outstanding: 463.6 million; Market cap: $9.0 billion, www.shaw.ca), is Canada’s largest cable-television operator, with 2.3 million basic cable subscribers in Alberta, B.C., Saskatchewan, Manitoba and Ontario. The company also owns Shaw Direct, which has 902,000 satellite subscribers. Shaw also provides high-speed Internet and telephone services. Shaw trades at 14.7 times this year’s forecast earnings of $1.41 a share. The shares yield a high 4.3%. However, the company faces strong competition for Internet subscribers from Telus Corp., $44.66, symbol T.A on Toronto (Shares outstanding: 320.7 million; Market cap: $14.7 billion). As well, Telus offers an Internet-based television service, which it is planning to expand....