transcanada

MANITOBA TELECOM SERVICES INC. $30.95 (Toronto symbol MBT; Shares outstanding: 79.3 million; Market cap: $2.4 billion; TSINetwork Rating: Average; Dividend yield: 4.2%; www.mts.ca) has completed the sale of its Allstream division to U.S.-based Zayo Group (New York symbol ZAYO). The company received $420.0 million, net of transaction costs. It will probably put the proceeds toward its long-term debt, which was $677.1 million as of September 30, 2015. That’s equal to 29% of its $2.4-billion market cap. Manitoba Telecom is still a hold....

As I’ve often pointed out, the stock market tends to put on an above-average rise in U.S. Presidential Election years. This provides a statistical rationale for optimism in 2016, since the next election is this November. But it’s no guarantee that the market will rise, for a couple of reasons. First, several ominous factors are weighing on the market right now, in addition to the election. These include the outlook for interest rates; the trend in prices for oil and other commodities; the rise in terrorist activity; the Chinese economic slowdown; and the sharp rise in the U.S. dollar and corresponding drop in the Canadian dollar. An abrupt shift in any of these factors could have a big influence on the market for the remainder of the year and beyond....

As I’ve often pointed out, the stock market tends to put on an above-average rise in U.S. Presidential Election years. This provides a statistical rationale for optimism in 2016, since the next election is this November. But it’s no guarantee that the market will rise, for a couple of reasons. First, several ominous factors are weighing on the market right now, in addition to the election. These include the outlook for interest rates; the trend in prices for oil and other commodities; the rise in terrorist activity; the Chinese economic slowdown; and the sharp rise in the U.S. dollar and corresponding drop in the Canadian dollar. An abrupt shift in any of these factors could have a big influence on the market for the remainder of the year and beyond....

Enbridge and TransCanada are facing strong opposition to their big pipeline proposals, so they’re focusing on smaller projects instead. This will give both companies more cash for dividends, but we feel TransCanada is the better buy right now. ENBRIDGE INC. $43 (Toronto symbol ENB; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 867.6 million; Market cap: $37.3 billion; Price-to-sales ratio: 1.1; Dividend yield: 4.9%; TSINetwork Rating: Above Average; www.enbridge.com) received regulatory approval for its $7.9-billion Northern Gateway pipeline in June 2014. This project would pump crude from Alberta to Kitimat, B.C. From there, tankers would ship it to customers in Asia. However, Ottawa recently banned oil tankers off the northern B.C. coast. Meanwhile, Enbridge is making progress on its ambitious $38-billion growth plan, which includes expanding its oil and gas pipelines and wind farms. The company will finish building these projects between 2016 and 2019....

In next week’s Successful Investor Hotline, we’ll reveal our top stock picks for 2016. Don’t miss this unique opportunity to profit. TRANSCANADA CORP., $43.47, Toronto symbol TRP, has launched two legal challenges to the U.S. government’s recent decision to block its proposed Keystone XL pipeline, which would have pumped crude oil from Alberta to the U.S. Gulf Coast. The company spent $4.3 billion on Keystone XL and now expects to write off between $2.5 billion and $2.9 billion of this total. To put these figures in context, TransCanada’s market cap (or the value of all outstanding shares) is $30.8 billion....

TransCanada is now challenging the U.S. government’s recent decision to block its proposed Keystone XL pipeline, which would have pumped crude oil from Alberta to the U.S. Gulf Coast. Even if it has to abandon this project, the company still has many other projects under development. These investments will also let TransCanada increase its dividend by between 8% and 10% each year through 2020. TRANSCANADA CORP. $44.61 (Toronto symbol TRP; Shares outstanding: 709.0 million; Market cap: $31.6 billion; TSINetwork Rating: Above Average; Dividend yield: 4.7%; www.transcanada.com) operates 68,000 kilometres of natural gas pipelines and over 11,800 megawatts of power generation in Canada and the U.S. In the three months ended September 30, 2015, the company earned $440 million, or $0.62 a share, down 2.2% from $450 million, or $0.63, a year earlier. That was mainly because of lower power prices in Alberta and unplanned power plant outages. However, gains from its pipelines and U.S. power plants boosted revenue by 20.1%, to $2.9 billion from $2.45 billion....

Exchange traded funds (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. That’s different from mutual funds, which you can only buy at the end of the day at a price that reflects the fund’s value at the close of trading. Prices of ETFs are quoted in newspaper stock tables and online. You pay brokerage commissions to buy and sell them, but their low management fees give them a cost advantage over most mutual funds....

TRANSCANADA CORP. $42.69 (Toronto symbol TRP; Shares outstanding: 708.9 million; Market cap: $30.7 billion; TSINetwork Rating: Above Average; Dividend yield: 4.9%; www.transcanada.com) recently had its proposed Keystone XL pipeline rejected by the U.S. The line would have pumped oil sands crude to refineries on the U.S. Gulf Coast.

So far, TransCanada has spent $2.4 billion U.S. on this $8.0-billion U.S. project. However, it can use some of the line’s equipment on other projects, which would minimize a writedown.

Meanwhile, TransCanada has $35 billion of large-scale projects underway, as well as $13 billion in small- to medium sized developments set to come into service in the next three years.

...

PLEASE NOTE: This is our last Hotline for 2015. Our next Hotline will go out on Friday, January 8, 2016. ENCANA CORP., $7.02, Toronto symbol ECA, fell 15% this week after cutting its dividend and 2016 capital spending plans. In response to the weak outlook for oil and natural gas, Encana has cut its quarterly payout by 78.6%, to $0.015 a share from $0.07 (all amounts except share price in U.S. dollars). The new annual rate of $0.06 yields 1.2%. Encana will also eliminate the 2% discount it offers to shareholders who reinvest their dividends in additional shares. In all, these moves will save it $185 million a year....

CANADIAN PACIFIC RAILWAY LTD., $169.77, Toronto symbol CP, has revised its takeover offer for U.S.-based railway Norfolk Southern Corp. (New York symbol NSC). The combined firm would be North America’s largest railway, with more than 56,000 kilometres of track. Buying Norfolk would also give CP greater access to ports on the U.S. Gulf Coast and Atlantic Ocean. Under the new deal, Norfolk shareholders would receive more stock and less cash: $32.86 U.S. a share in cash plus 0.451 of a CP share for each Norfolk share held. That would give them 47% of the combined company, compared to 41% under the original offer....