transcanada

ISHARES CANADIAN BOND BROAD INDEX FUND $28.47 (CWA Rating: Income) (Toronto symbol XBB; buy or sell through a broker) mirrors the performance of the Scotia Capital Universe Bond Index. This index consists of a diversified range of investment grade Canadian government and corporate bonds, with a term to maturity of more than one year. At last report, the bonds in the index were 42.5% Government of Canada bonds, 27.5% Provincial Government bonds, 1.3% Municipal bonds and 28.7% Corporate bonds....

We generally advise against investing in bond funds because we don’t believe bond fund managers can add enough value to offset their fees. However, if you need steady income and want to hold bond funds, here are two funds that have low fees and don’t engage in speculative trading. ISHARES CANADIAN SHORT BOND INDEX FUND $28.03 (CWA Rating: Income) (Toronto symbol XSB; buy or sell through a broker) mirrors the performance of the Scotia Capital Short Term Bond Index....

RBC CANADIAN DIVIDEND FUND $49.82 (RBC 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 43.8% of its portfolio in Financial services stocks. It has a further 16.9% in Energy stocks and 8.1% in Materials. The $8.9 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 Suncor Energy. Over the last five years, RBC Canadian Dividend Fund has posted a 15.8% annual rate of return. That’s less than the S&P/TSX’s gain of 18.4% over the same period....

BMO DIVIDEND FUND $50.82 (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 57.3% of its portfolio in the Financial services industry. Its next-largest holdings are Energy at 13.3% and Consumer discretionary at 6.5%. BMO Dividend Fund’s largest holdings are Manulife Financial, Bank of Nova Scotia, CIBC, Royal Bank of Canada, Power Financial, Toronto-Dominion Bank, Canadian National Railway, TransCanada Corporation, Alcan, Imperial Oil, Brookfield Asset Management, Thomson Corporation, BCE Inc. and Sun Life Financial. Over the last five years, the $5.9 billion BMO Dividend Fund has posted a 15.3% annual rate of return. That’s under the S&P/TSX’s gain of 18.4%. 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 15.4% over the last year, compared to a gain of 20.1% for the S&P/TSX index. BMO Dividend’s MER is 1.73%....

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....

TRANSCANADA CORP. $37 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 536.3 million; Market cap: $19.8 billion; SI Rating: Above average) operates a 59,000-km network of natural gas pipelines in Canada and the United States. This business supplies about two-thirds of its profit. The remaining third comes from its electrical power division. TransCanada’s revenue rose from $5.2 billion in 2002 to $7.5 billion in 2006, or 9.6% compounded annually. Profits from continuing operations rose from $1.55 a share (total $747 million) in 2002 to $2.47 a share ($1.2 billion) in 2005, but fell to $2.14 a share ($1.05 billion) in 2006. If you disregard gains on the sale of assets, per-share income would have grown from $1.72 in 2005 to $1.89 in 2006. In the past few years, the company has used acquisitions to cut its reliance on its traditional gas pipeline business. Its most profitable investment to date is its minority stakes in two partnerships that operate Ontario’s Bruce nuclear power facility. Bruce provided 10% of TransCanada’s operating income in 2006....

AGRIUM INC. $46 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 134.0 million; Market cap: $6.2 billion; SI Rating: Average) owns half of a nitrogen facility in Argentina that has had to suspend operations lately due to natural gas shortages. This plant accounts for less than 10% of Agrium’s revenue, so the shutdown’s effect will be small. But costlier natural gas could hurt its profit this year. Agrium is a hold. TRANSCONTINENTAL INC. $21 (Toronto symbol TCL.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 85.4 million; Market cap: $1.8 billion; SI Rating: Average) has paid an undisclosed sum for The Oxbow Herald, a weekly newspaper in southeast Saskatchewan. It now publishes nine newspapers in Saskatchewan, reaching 65,000 households in 140 communities....

UNITED CORPORATIONS $68.80 (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, 31.2% of the fund’s $1.1 billion portfolio was invested in Canadian equities, 26.0% in the U.S., 21.2% in Europe, 8.0% in the UK, 11.7% in Asia and 1.4% 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. $28.12 (Toronto symbol TA; SI Rating: Average) operates 50 power plants, in Canada, the United States, Mexico and Australia. In the three months ended March 31, 2007, TransAlta’s revenues fell 1.4%, to $723.7 million from $733.7 million. Earnings before unusual items fell 12.5%, to $66 million or $0.33 a share, from $75.4 million or $0.38 a share. Maintenance at some power plants took longer than planned, and that hurt results. Cash flow fell 18% in the latest quarter, to $198.1 million or $0.98 a share, from $217.4 million or $1.09 a share....

BANK OF NOVA SCOTIA $53 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; Shares outstanding: 993.0 million; Market cap: $52.6 billion; SI Rating: Above average) continues to expand its international operations, which supply a third of its earnings. It recently agreed to acquire a 24.99% stake in Thailand’s eighth-largest bank for $240 million, which is about 24% of the $1.02 billion or $1.01 a share it earned in its most recent fiscal quarter. The bank is also opening new offices in Malaysia and Turkey. Overseas operations like these, particularly with local partners, give Bank of Nova Scotia access to high-potential markets at moderate risk. International operations also cut its exposure to the Canadian economy and its heavy reliance on natural resources. Bank of Nova Scotia is a buy....