telus

Rogers Communications, $34.45, symbol RCI.B on Toronto (Shares outstanding: 635.7 million; Market cap: $21.9 billion), is one of Canada’s largest wireless and cable providers. Rogers has 7.7 million wireless subscribers throughout Canada, and 2.3 million basic-cable subscribers in Ontario and eastern Canada. Rogers also owns assets that include the Toronto Blue Jays and Toronto’s Rogers Centre (formerly the SkyDome). The company has three segments: Wireless, which generates 54% of Rogers’ revenues, Cable (33%) and Media (13%). 1) Rogers Wireless includes the Rogers and Fido brands, which combined account for about 37% of all Canadian wireless subscribers. Wireless offers cellular voice, data and messaging services throughout Canada. It also offers mobile access to the Internet, wireless email, digital pictures and video transmissions....

The Telus Corp. bond is OK to hold if you want to invest in corporate bonds. However, we think you are generally better off investing in Telus’s common shares. The company faces competition from new entrants in the wireless field. However, we think Telus’s strong brands and reputation put it in a position to compete and grow. What’s more, its shares yield 5.5%. Its dividends, unlike bond interest, qualify for the gross-up and dividend tax credit treatment that is normally applicable to dividends from taxable Canadian corporations. So if you hold are in the top tax bracket and you hold Telus shares in your personal taxable account, its 5.5% dividend gives you the same after-tax return as interest of 7.8%. Telus Corp. common shares are a buy....

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%....

TELUS CORP. (Toronto symbols T $36 and T.A $33; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 317.8 million; Market cap: $11.4 billion; SI Rating: Above average) had considered acquiring BCE before BCE accepted the offer from the Ontario Teachers’ Pension Plan. Even though the BCE privatization has failed, Telus will probably not launch a new takeover offer. That’s mainly because the credit crisis would make it difficult for Telus to borrow the cash it would need. Telus may instead try to merge its wireless operations with those of BCE into 50-50 joint venture. There is little geographic overlap between the two systems, so a partnership with BCE would probably win regulatory approval. Combining the technical and marketing operations could also lead to substantial cost savings. Lower costs would help the combined operation compete with new companies that plan to enter Canada’s wireless market in 2009. Telus is a buy. The cheaper, non-voting ‘A’ shares are the better choice.

BCE INC. $23 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 806.2 million; Market cap: $18.5 billion; SI Rating: Above average) provides telephone service to over 7.5 million residential and business customers in Ontario and Quebec. BCE also provides wireless service to 6.4 million subscribers across Canada. In June, 2007, BCE accepted a $42.75-a-share all-cash takeover offer from a private consortium led by the Ontario Teachers’ Pension Plan. The deal required auditing firm KPMG to provide an opinion on BCE’s solvency following the takeover. KPMG’s preliminary analysis shows that BCE’s liabilities would probably exceed the value of its assets. KPMG’s report effectively killed the takeover. BCE recently stopped paying dividends on its common shares as part of deal with the consortium to help ensure that takeover would go through. Now that the deal is dead, BCE will probably resume quarterly dividend payments. The previous annual rate of $1.46 would now yield 6.3%....

We continued to recommend BCE for the past year and a half, despite the risk that its $42.75 takeover might fall through due to the developing credit crisis and bear market. That’s because, either way, we felt BCE still offered an attractive investment opportunity. Now that the possibility of a takeover (at a price anywhere near $42.75) has ended, BCE seems unduly depressed. This partly reflects dumping by traders who only held the stock because they wanted to profit from the takeover. It may also be partly due to a misunderstanding by some investors of BCE’s financial situation. Even without the likelihood of a takeover, BCE still has strong appeal. Its businesses continue to generate steady cash flows. A new restructuring plan will also give BCE more cash to invest in its high-growth operations, particularly wireless and high-speed Internet access. BCE could also unlock some of its value by spinning off or selling some of its operations....

MAPLE LEAF FOODS INC. $10.75, Toronto symbol MFI, has agreed to settle several class action lawsuits stemming from this summer’s listeria outbreak at its Toronto meat-processing plant. The settlement will cost the company between $25 million and $27 million. To put that in perspective, Maple Leaf lost $12.9 million or $0.10 a share in the three months ended September 30, 2008, mainly due to the costs to recall the contaminated products and improve food safety at all of its plants. If you disregard these costs, Maple Leaf would have earned $0.13 a share in the third quarter. Maple Leaf’s stock is up nearly 65% since it fell to $6.54 in October, 2008, thanks to its quick response to this crisis. The settlement of these class-action lawsuits will now let Maple Leaf focus on rebuilding consumer confidence in its products....

BANK OF NOVA SCOTIA $33.50 (Toronto symbol BNS: Shares outstanding: 991.9 million; Market cap: $33.2 billion; SI Rating: Above average) has recorded charges totaling $642 million (after taxes) for its fourth quarter ended October 31, 2008. These charges include $370 million in writedowns of illiquid securities, $115 million of losses related to the bankruptcy of U.S. brokerage firm Lehman Brothers, and $110 million in writedowns of interest rate hedging contracts. The bank also still holds $348 million U.S. worth of securities that it may have to write down if conditions worsen. These charges are manageable considering that Bank of Nova Scotia earned $1.0 billion or $0.98 a share in the third quarter of fiscal 2008. Bank of Nova Scotia’s main businesses are still profitable, although the bank plans to cut risk by tightening lending to consumers on big items items such as homes....

EMERA INC. $21 (Toronto symbol EMA) earned $0.05 a share in the three months ended September 30, 2008, down 86.5% from $0.37 a year earlier. If you disregard a writedown and one-time costs, Emera would have earned $0.22 a share in the most recent quarter. The drop was mainly due to higher fuel costs at its main subsidiary, Nova Scotia Power. Revenue fell 4.7%, to $295.8 million from $310.3 million. However, high power rates should expand revenue in 2009. Buy. TELUS CORP. $37 (Toronto symbol T.A) estimates that it will spend $50 million on restructuring activities in 2008. That’s up from its earlier estimate of $30 million. To put these costs in perspective, Telus earned $0.89 a share (total $285.1 million) in the third quarter of 2008. However, improving its efficiency will help Telus compete with new entrants in the wireless field. Buy. GREAT-WEST LIFECO INC. $27 (Toronto symbol GWO) earned $0.48 a share in the third quarter of 2008, down 5.9% from $0.51 a year earlier. The drop was mainly due to unusual charges at its U.S. mutual fund subsidiary, Putnam Investment Trust. Despite the recent market turmoil, Great-West remains well capitalized. Best Buy.

BANK OF NOVA SCOTIA $31.25, Toronto symbol BNS, expects to record charges totaling $595 million (after taxes) for its fourth fiscal quarter ended October 31, 2008. These charges include $370 million in writedowns of illiquid securities, $115 million of losses related to the bankruptcy of U.S. brokerage firm Lehman Brothers, and $110 million in writedowns of interest rate hedging contracts. The bank also still holds $348 million U.S. worth of securities that it may have to write down if conditions worsen. These charges are manageable considering that Bank of Nova Scotia earned $1.0 billion or $0.98 a share in the third quarter of fiscal 2008. Its main businesses are still profitable, and the bank is taking advantage of the turmoil in the financial markets to strengthen its domestic and international operations with acquisitions. Bank of Nova Scotia is a buy....