transcanada

BMO DIVIDEND FUND $44.37 (BMO Mutual Funds, 77 King Street West, Suite 4200, Royal Trust Tower, Toronto, Ont., M5K 1J5, 1-800-665-7700; Web site: www.bmo.com. No load — deal directly with the bank) (CWA Rating: Conservative) currently holds about 49.0% of its portfolio in the Financial services industry. Its next-largest holdings are Energy at 15.1% and Consumer discretionary at 7.5%. BMO Dividend Fund’s largest holdings are Manulife Financial, Bank of Nova Scotia, CIBC, Royal Bank of Canada, Power Financial Corporation, Toronto-Dominion Bank, Canadian National Railway, TransCanada Corporation, Imperial Oil, Shaw Communications, Enbridge Inc., Husky Energy and Sun Life Financial. Over the last five years, the $5.8 billion BMO Dividend Fund has posted a 14.6% annual rate of return. That’s under the S&P/TSX’s gain of 18.3%. However, the S&P/TSX index held a high 40% or so of its holdings in Resources shares. That’s been one of the best-performing, although riskiest, sectors. The fund gained 1.8% over the last year, compared to a gain of 9.8% for the S&P/TSX index. BMO Dividend’s MER is 1.71%....

BMO Dividend and RBC Canadian Dividend hold mostly high-quality stocks. These stocks sometimes run into trouble and go through lengthy struggles, just like lesser investments. Eventually, though, most solve their problems and go on to thrive anew. Both funds hold a high proportion of their assets in financial services stocks. However, if you must focus on something, finance is a relatively stable sector. If you do invest in these funds, be sure to adjust the rest of your portfolio so these funds won’t overly concentrate your holdings in the financial sector....

RBC CANADIAN DIVIDEND FUND $44.84 (RBC Mutual Funds, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-800-463-3863; Web site: www.royalbank.com. No load — deal directly with the bank) has 38.1% of its portfolio in financial-services stocks. It has a further 14.4% in energy stocks and 8.5% in consumer discretionary. The $9.6-billion RBC Canadian Dividend Fund’s top stock holdings are Royal Bank of Canada, Bank of Nova Scotia, Toronto-Dominion Bank, Manulife Financial, Canadian Imperial Bank of Commerce, TransCanada Corporation, Bank of Montreal, BCE Inc. and Power Corporation. Over the last five years, RBC Canadian Dividend Fund has posted a 14.9% annual rate of return. That’s less than the S&P/TSX’s gain of 18.3% over the same period....

BELL ALIANT REGIONAL COMMUNICATIONS INCOME FUND $28 (Toronto symbol BA.UN; Conservative Growth Portfolio, Units outstanding: 127.1 million; Market cap: $3.6 billion; SI Rating: Above average) has agreed to buy the publicly owned telephone system in Kenora, Ontario for $27 million. The price is equal to 39% of the $0.53 a unit (total $68.8 million) that Bell Aliant earned in the third quarter of 2007. As a city-owned business, the Kenora phone system did not have the resources to invest in new communication services, such as high-speed Internet access. Strong demand for these services should help Bell Aliant quickly recover the cost of this purchase. Bell Aliant is a buy....

BCE INC. $36.29, Toronto symbol BCE, is trading nearly 15% below the $42.75-a-share takeover offer it accepted in July 2007. This is partly because several institutional holders of BCE bonds have launched a class-action lawsuit to oppose it. BCE’s plan to take on more debt has hurt the value of their holdings. If the suit succeeds and forces BCE to compensate the bondholders for their losses, the Ontario Teachers’ Pension and its partners may decide to abandon the takeover. Liquidity problems in the debt markets could also scuttle the takeover, since that could hurt the ability of the takeover consortium to issue new bonds. This group has also lined up loans from several banks, but recent writedowns of U.S. subprime mortgages have raised fears that these banks may withdraw or cut their involvement. However, lower interest rates will cut the buyers’ costs. The drop in BCE suggests that the takeover is unlikely to go through. But at the current reduced price, BCE is once again an attractive buy for income and growth....

UNITED CORPORATIONS $62.50 (Toronto symbol: UNC) (165 University Ave., 10th Floor, Toronto, ON M5H 3B8. 416-947-2583. Buy or sell through a broker) invests in a wide variety of average-quality to above-average quality Canadian and foreign stocks. At last report, 34.6% of the fund’s $1.1 billion portfolio was invested in Canadian equities, 23.7% in the U.S., 20.7% in Europe, 6.2% in the UK, 13.1% in Asia and 1.0% in Mexico and Latin America. The fund’s largest holdings included Bank of Nova Scotia, Royal Bank of Canada, Manulife, Talisman Energy, Algoma Central Corporation, Nexen, TransCanada Corporation, General Electric, TD Bank and Chevron....

TRANSALTA CORP. $34 (Toronto symbol TA; SI Rating: Average) operates 50 power plants, in North America and Australia. In the three months ended September 30, 2007, TransAlta’s revenues rose 8.5%, to $711.6 million from $656 million. Earnings before unusual items rose 80.2%, to $63.6 million or $0.32 a share, from $35.3 million or $0.18 a share. Higher production and selling prices at Centralia Coal and Alberta Hydro contributed to the increase. The company’s $1.00 a share annual dividend rate gives it a current yield of 2.9%....

LOBLAW COMPANIES LTD. $45 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 274.2 million; Market cap: $12.3 billion; SI Rating: Above average) offered discounts on purchases over $100 in the week before Thanksgiving. The company hopes promotions like this will help it compete with Wal-Mart’s new low-cost supermarkets. In the short term, however, the plan will hurt Loblaw’s profit margins. Loblaw is still a hold. BOMBARDIER INC. (Toronto symbols BBD.A $6.01 and BBD.B $5.99; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $10.2 billion; SI Rating: Extra risk) recently recommended that airlines ground older models of one of its planes, due to possible problems with their landing gear. About 90% of these planes are now back in service....

TRANSCANADA CORP. $36 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 536.3 million; Market cap: $19.3 billion; SI Rating: Above average) will take part in the expanded refurbishment of unit four of the ‘A’ section of Ontario’s Bruce nuclear power station. The $1 billion addition will bring the cost of the restart of the four units at the plant to a total of $5.25 billion, with TransCanada’s share now set at $2.625 billion. TransCanada holds a 48.7% stake in the partnership that is half way through the restart of the ‘A’ section of Bruce. The additional investment by TransCanada, Cameco and the other partners will extend the expected life of unit four from 2017 to 2036. The other three units are already scheduled to last until 2036. Bruce A now operates at 50% capacity, but should reach full capacity by 2010 when the restart of units one and two is complete....

PETRO-CANADA $56 (Toronto symbol PCA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 488.8 million; Market cap: $27.4 billion; SI Rating: Average) has formed a joint venture with Gazprom, a major Russian natural gas company, to build a liquefied natural gas (LNG) plant that will cool gas into a liquid form for transport by tanker. Petro-Canada also has a joint venture with TransCanada Corp. to build a plant in Quebec that would re-convert the LNG from Russia and elsewhere back into natural gas for transportation through pipelines to markets in Quebec and Ontario. These terminals will cost billions to build and operate. Sharing these costs with partners cuts Petro-Canada’s risk. The company aims to begin importing LNG in late 2009....