Verizon Communications Inc.

TELUS CORP. $45 (Toronto symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 605.5 million; Market cap: $27.2 billion; Price-to-sales ratio: 2.2; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.telus.com) is Canada’s second-largest wireless carrier, after Rogers Communications, with 8.2 million subscribers. Wireless now supplies 55% of Telus’s revenue and 66% of its earnings. The remaining 45% of revenue and 34% of earnings come from its wireline division, which serves 3.1 million traditional phone customers in B.C., Alberta and eastern Quebec. This business also has 1.5 million Internet users and 937,000 TV clients. Telus’s revenue rose 22.6%, from $9.8 billion in 2010 to $12.0 billion in 2014. Earnings gained 45.0%, from $983 million in 2010 to $1.4 billion in 2014. Per-share profits rose 51.0%, from $1.53 to $2.31, on fewer shares outstanding. Cash flow per share improved 24.4%, from $4.30 to $5.35....

Since 2000, Telus has spent $27 billion—roughly its current market cap—to boost the speed and capacity of its wireless and high-speed Internet networks. Meantime, its strong customer service is helping it hang on to current subscribers. These strengths should keep fuelling the company’s stock, which is up 155% in the past 15 years, while its rising earnings mean its dividend hikes and share buybacks will continue. TELUS CORP. $45 (Toronto symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 605.5 million; Market cap: $27.2 billion; Price-to-sales ratio: 2.2; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.telus.com) is Canada’s second-largest wireless carrier, after Rogers Communications, with 8.2 million subscribers. Wireless now supplies 55% of Telus’s revenue and 66% of its earnings....

Our view on how Verizon, one of our best dividend stocks in the U.S., aims to hold off its challengers with two takeovers, including AOL.

A Canadian ETF with U.S. stocks promotes low volatility through beta ratings, but we recommend cost-effective ETFs matching a broad index.

In the past few years, Verizon and AT&T have aggressively expanded their wireless and high-speed Internet networks. That has attracted new users and helped offset falling revenue from traditional phones. But new challengers continue to emerge, like low-cost wireless service from Google and video-streaming services like Netflix, which threaten their fibre optic TV offerings. In response, both AT&T and Verizon are buying up companies that should help them compete— and keep raising their dividends....

Google Fi will offer cellphone/smartphone service that uses Wi-Fi networks whenever possible. When Wi-Fi is unavailable, it will switch users to one of two existing cell networks, T-Mobile or Sprint, whichever is stronger at the customer’s location. The company plans to add more cell-network alternatives as they become available. The service will initially cost $20 a month, plus $10 for each gigabyte (GB) of data. That’s much cheaper than most cellphone plans. Moreover, the service will refund the pro-rata cost of unused data each month, which is unheard of in the wireless industry. To top it off, Fi will offer service in more than 120 countries at a far lower cost than you can get by using a U.S.-based cellphone (and U.S. cell rates are well below Canadian rates). More important, Google Fi will be vastly more convenient for travellers than any current alternative. Google Fi is the Internet search giant’s plan to disrupt what it sees as the high cost and ineffectiveness of U.S. carriers like AT&T (symbol T and a recommendation of Wall Street Stock Forecaster), Verizon (symbol VZ on New York and also a recommendation of Wall Street Stock Forecaster), T-Mobile and Sprint....

VERIZON COMMUNICATIONS INC. $47 (New York symbol VZ, Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 4.1 billion; Market cap: $192.7 billion; Priceto- sales ratio: 1.5; Dividend yield: 4.7%; TSINetwork Rating: Average; www.verizon.com) gets 70% of its revenue and 95% of earnings from its 108.6 million wireless subscribers. The other 30% of revenue and 5% of earnings comes from its wireline business, which serves 19.5 million traditional phone customers and 26.4 million high-speed Internet and digital TV users. In 2014, the company bought the 45% of the Verizon Wireless joint venture it didn’t already own from U.K.-based Vodafone Group (Nasdaq symbol VOD). Verizon Wireless sells wireless services in the U.S.

Verizon paid $130 billion for Vodafone’s stake, including $58.9 billion in cash. It also issued $61.3 billion worth of common shares to Vodafone shareholders and borrowed most of the remaining $9.8 billion.

The Vodafone stake, along with strong wireless demand, boosted the company’s revenue by 19.3%, from $106.6 billion in 2010 to $127.1 billion in 2014. Earnings fell from $0.90 a share (or a total of $2.5 billion) in 2010 to $0.31 a share (or $875 million) in 2012, mainly due to a $7.2-billion charge related to a change in its pension plan accounting policies. Earnings jumped to $4.00 a share (or $11.5 billion) in 2013 but fell to $2.42 a share (or $9.6 billion) in 2014 as the Verizon Wireless purchase added more one-time charges and other operating costs.

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BMO Low Volatility U.S. Equity ETF, $25.34, symbol ZLU on Toronto (Units outstanding: 11.5 million; Market cap: $291.4 million; www.etfs.bmo.com), aims to invest in a portfolio of low-beta U.S. stocks. The fund has a 0.30% MER and yields 2.0%. The ETF selects the 100 lowest-beta stocks from a universe of the largest, most liquid U.S. securities. The underlying portfolio is rebalanced in June and December. In this respect, it differs widely from conventional ETFs which are designed to minimize trading and trading expense. BMO Low Volatility U.S. Equity ETF’s top holdings are Newmont Mining, McDonald’s, Autozone, Verizon Communications, Quest Diagnostics, Dollar General, Family Dollar, AT&T, Laboratory Corporation of America and AmerisourceBergen Corp....

NORDSTROM INC., $72.64, New York symbol JWN, has formed an alliance with Toronto-Dominion Bank (Toronto symbol TD), a recommendation of The Successful Investor, our newsletter that focuses on conservative Canadian stocks. Under the deal, TD will purchase Nordstrom’s credit card loans, which total $2.2 billion. To put that in perspective, Nordstrom’s market cap (or the value of all of its outstanding shares) is $14.0 billion. Nordstrom will still get part of the revenue from these credit cards and will keep managing their related loyalty plans. The companies expect to complete the deal in the second half of 2015. Separately, TD has agreed to become the exclusive issuer of Nordstrom-branded Visa and private-label credit cards....

MENTOR GRAPHICS CORP., $26.11, symbol MENT on Nasdaq, makes technology for improving the design of electronic products and speeding up their development. For example, Mentor’s software lets automakers use less wiring in a car, identify potential safety issues and minimize electromagnetic effects on sensitive components. In the three months ended April 30, 2015, the company’s revenue rose 7.9%, to $272.1 million from $252.2 million a year earlier. Excluding one-time items, earnings per share jumped sharply, to $0.28 from $0.11, far exceeding the consensus estimate of $0.18. Sales to the auto industry were very strong, and the company continues to cut costs....