transcanada

TIM HORTONS INC., $88.38, Toronto symbol THI, still plans to merge with Miami-based Burger King Worldwide (New York symbol BKW), even though the U.S. government is now clamping down on “tax inversion” deals like this one. The combined firm will be based in Oakville, Ontario, which will let it take advantage of Canada’s 15% corporate tax rate, compared to 35% in the U.S. Under the new rules, it’s now more difficult for the foreign parent firm to shift funds between subsidiaries....

ENCANA CORP., $24.89, Toronto symbol ECA, announced this week that it will sell its remaining 54% stake in PriarieSky Royalty Ltd. (Toronto symbol PSK) to a group of underwriters. The company recently set up PrairieSky as a new firm to hold its Clearwater properties in southern Alberta. PriarieSky owns the oil and natural gas rights to 5.2 million acres. It does not drill wells or explore for new reserves. Instead, it collects royalties from other oil and gas producers. Encana will receive $2.6 billion when it completes the sale later this month. That’s equal to 14% of its $18.6-billion market cap....

TRANSCANADA CORP. $54.00 (Toronto symbol TRP; Shares outstanding: 708.0 million; Market cap: $38.2 billion; TSINetwork Rating: Above Average; Dividend yield: 3.6%; www.transcanada.com) operates 68,500 kilometres of natural gas pipelines and over 11,800 megawatts of power generation in Canada and the U.S.

In the three months ended June 30, 2014, TransCanada’s revenue rose 11.2%, to $2.2 billion from $2.0 billion a year earlier. Excluding one-time items, earnings per share fell 7.8%, to $0.47 from $0.51. That was mostly due to maintenance outages at its Bruce Power plant in Ontario and weaker power prices in Alberta.

The company completed $6.1 billion worth of growth projects in 2013 and another $1.7 billion in the first half of this year. It plans to complete $36 billion of additional projects secured by long-term contracts by 2018 (an amount almost equal to its current $38.2-billion market cap). That includes $3.0 billion more for Keystone XL.

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TransCanada Corp. gets a lot of media coverage over its proposed Keystone XL pipeline, which would pump crude from Alberta’s oil sands to refineries on the U.S. Gulf Coast. However, Keystone is just one of many projects the company is planning. These developments will keep its profits high and let it continue to raise its dividend. TRANSCANADA CORP. $54.00 (Toronto symbol TRP; Shares outstanding: 708.0 million; Market cap: $38.2 billion; TSINetwork Rating: Above Average; Dividend yield: 3.6%; www.transcanada.com) operates 68,500 kilometres of natural gas pipelines and over 11,800 megawatts of power generation in Canada and the U.S. In the three months ended June 30, 2014, TransCanada’s revenue rose 11.2%, to $2.2 billion from $2.0 billion a year earlier. Excluding one-time items, earnings per share fell 7.8%, to $0.47 from $0.51. That was mostly due to maintenance outages at its Bruce Power plant in Ontario and weaker power prices in Alberta....

ISHARES S&P/TSX 60 INDEX FUND $21.94 (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, it must ensure that all sectors are represented, so it holds a few we wouldn’t include.

The index’s top holdings are Royal Bank, 8.1%; TD Bank, 7.4%; Bank of Nova Scotia, 6.4%; Suncor Energy, 4.8%; CN Railway, 4.2%; Canadian Natural Resources, 3.9%; Bank of Montreal, 3.7%; Enbridge, 3.1%; Valeant Pharmaceuticals, 3.0%; Manulife Financial, 2.9%; CIBC, 2.8%; BCE, 2.7%; TransCanada Corp., 2.6%; Potash Corp., 2.5%; CP Rail, 2.2%; and Cenovus, 1.9%.

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TRANSCANADA CORP. $51.93 (Toronto symbol TRP; Shares outstanding: 708.0 million; Market cap: $36.3 billion; TSINetwork Rating: Above Average; Dividend yield: 3.7%; www.transcanada.com) has agreed to build a $1.9-billion, 260-kilometre pipeline that would pump natural gas from northeastern B.C.’s Dawson Creek area to a proposed liquefied natural gas (LNG) plant at Kitimat, on the
province’s coast.

The plant is a joint venture between Chevron Corp. (New York symbol CVX) and Apache Corp. (New York symbol APA). Both are recommendations of Wall Street Stock Forecaster, our newsletter that focuses on U.S. stocks.

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TRANSCANADA CORP. $51.93 (Toronto symbol TRP; Shares outstanding: 708.0 million; Market cap: $36.3 billion; TSINetwork Rating: Above Average; Dividend yield: 3.7%; www.transcanada.com) has agreed to build a $1.9-billion, 260-kilometre pipeline that would pump natural gas from northeastern B.C.’s Dawson Creek area to a proposed liquefied natural gas (LNG) plant at Kitimat, on the province’s coast. The plant is a joint venture between Chevron Corp. (New York symbol CVX) and Apache Corp. (New York symbol APA). Both are recommendations of Wall Street Stock Forecaster, our newsletter that focuses on U.S. stocks....

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. $50 (Toronto symbol TRP; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 707.4 million; Market cap: $35.4 billion; Price-to-sales ratio: 3.8; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.transcanada.com) operates a 68,500-kilometre pipeline network that pumps natural gas from Alberta to Eastern Canada and the U.S. The company’s pipelines supply 20% of North America’s natural gas. In 2013, they provided 51% of TransCanada’s revenue and 53% of its earnings.

The company also owns or invests in power plants in Alberta, Ontario, Quebec and the northeastern U.S. In all, these facilities have over 11,800 megawatts of generating capacity. TransCanada’s electricity operations now supply 36% of its revenue and 30% of its earnings.

In 2011, the company started up its oil pipeline division. This business mainly consists of the Keystone pipeline, which pumps oil from Alberta to refineries in Illinois, and a distribution hub in Cushing, Oklahoma. Oil pipelines supply the remaining 13% of TransCanada’s revenue and 17% of its earnings.

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ENBRIDGE INC., $51.09, Toronto symbol ENB, has won approval from Ottawa for its Northern Gateway pipeline. Northern Gateway will pump crude from Alberta’s oil sands to Kitimat, B.C. From there, tankers would ship the oil to customers in Asia. It will cost $7.9 billion to build this project. That’s equal to 19% of Enbridge’s $42.7-billion market cap (or the value of all its outstanding shares). However, that estimate is sure to rise as other oil sands and pipeline projects drive up labour and material costs....