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Your guide to safe-money investing

Published by The Successful Investor Inc.
218 Sheppard Ave. E., Toronto, ON, M2N 3A9
tel: (416) 756-0888; toll-free: 1-888-292-0296; fax: (416) 756-0397
email: service@tsinetwork.ca
Mid-February 2016 through Mid-March 2016
Vol. 19, No. 2 Pages 9 through 16

Our mission: Making you a successful investor!

Our five top ETF picks for 2016

CP cuts will fuel gains

CANADIAN PACIFIC RAILWAY
$159.03 (Toronto symbol CP; Shares
outstanding: 153.8 million; Market
cap: $25.5 billion; TSINetwork
Rating: Above Average; Yield: 0.9%;
www.cpr.ca) reported 5.9% lower
freight volumes in the latest quarter,
mainly because of falling prices for
oil, minerals and other commodities.

In the three months ended

December 31, 2015, CP earned $419
We feel that investors will profit the most by holding a million, down 8.9% from $460 million
well-balanced portfolio of high-quality stocks. However, if you don't a year earlier. However, per-share
earnings gained 1.5%, to $2.72 from
want to build a portfolio, or you want to supplement your individual
$2.68, on fewer shares outstanding.

Dear safe-money investor:

stock holdings, then ETFs can provide a great alternative.

Revenue fell 4.1%, to $1.69 billion

from
$1.76 billion. Still, revenue from
The main factors we use to evaluate ETFs are the stocks they hold,
forest
products jumped 20.4%, and
the diversification of their holdings across the five economic sectors
fertilizer shipments rose 18.0%.

and the fees (MERs) they charge.

CP is benefiting from greater

In general, investors holding mainly ETFs would want, say, 60% in efficiency, which includes speeding
up trains and cutting time spent at
Canadian ETFs and 20% to 30% in U.S. ETFs.

terminals. Its operating ratio was a

Safety-conscious investors could add some foreign ETFs, in record 59.8% in the latest quarter,
reasonable quantities: perhaps 10% to 15% (including 5% or so in the same as a year ago. (Operating
ratio is calculated by dividing regular
higher-risk funds, such as emerging-market ETFs).
operating costs by revenue. The
lower the ratio, the better.)

Here are our top five ETF picks for 2016:

ISHARES S&P/TSX 60 INDEX ETF $18.65 (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. The ETFs MER is just 0.18% of
assets, and the units yield 3.2%.

Job cuts are another part of CPs

improving efficiency. Since 2012, it
has reduced its workforce by 7,000
positions; it ended 2015 with 12,943
workers. Due to lower commodity
demand, CP still plans to cut 1,000
more jobs in 2016. It will also reduce
its capital spending, to $1.1 billion in
2016 from $1.5 billion in 2015.

The index mostly consists of high-quality companies. However, it

CP expects this years earnings per
must ensure that all sectors are represented, so it holds a few we share to rise at least 10%, to $11.11.
wouldnt include.
The stock trades at a moderate 14.3
times that forecast.

The indexs top holdings are Royal Bank, 8.7%; TD Bank, 8.0%;
Bank of Nova Scotia, 5.6%; CN Railway, 4.8%; BCE, 4.0%; Bank of
Montreal, 3.9%; Suncor Energy, 3.8%; (continued top of page 10)

CP Rail is a buy.
Pat McKeough

Page 10

Canadian Wealth Advisor

Valeant Pharmaceuticals, 3.5%; Enbridge Inc., 3.3%;

and Manulife Financial Corp., 3.1%.

Mid-February 2016

Trust Shares, holds stocks representing the Nasdaq

100 Index, which consists of the 100 largest
companies on the Nasdaq exchange by market cap.

iShares S&P/TSX 60 Index ETF is a top ETF

pick for 2016

The Nasdaq 100 Index contains shares of companies in a number of major industries, including
ISHARES CANADIAN SELECT DIVIDEND computer hardware and software, telecommunicaINDEX ETF $20.37 (Toronto symbol XDV; buy or sell tions, retail/wholesale trade and biotechnology. It
through brokers; ca.ishares.com) holds 30 of the highest- does not contain financial firms. The funds MER is
yielding Canadian stocks. Its selections are based on about 0.20%. It yields 1.4%.
dividend growth, yield and payout ratio. The weight
The indexs highest-weighted stocks are Apple,
of any one stock is limited to 10% of the ETFs
assets. The funds MER is 0.55%, and it yields 5.0%. 10.9%; Alphabet Inc., 10.2%; Microsoft, 8.8%;
Amazon.com, 5.4%; Facebook, 5.4%; Intel Corp.,
Its top holdings are CIBC, 9.7%; Bank of 2.9%; Comcast, 2.8%; Gilead Sciences, 2.5%; Cisco
Montreal, 7.4%; Royal Bank, 6.8%; BCE, 6.5%; Systems, 2.4%; and Qualcomm, 1.3%.
Bank of Nova Scotia, 5.6%; Rogers CommunicaPowerShares QQQ ETF is a top ETF pick for
tions, 5.2%; Laurentian Bank of Canada, 5.0%;
Manitoba Telecom, 5.0%; TD Bank, 4.7%; IGM 2016.
Financial, 4.4%; and TransCanada Corp., 4.4%.
ISHARES MSCI GERMANY FUND $24.15 (New
The ETF holds 58.6% of its assets in financial York symbol EWG; buy or sell through brokers) tracks the
stocks. The top Canadian finance stocks have sound stocks in the MSCI Germany Index.
prospects, but if you invest in this ETF, be sure to
This index aims to replicate 85% of the market
adjust the rest of your portfolio so it wont be overly
capitalization of the German stock market. The
concentrated in the financial sector.
remaining 15% is unavailable for investment, partly
iShares Canadian Select Dividend is a top ETF due to limitations on foreign ownership.
pick for 2016.
The ETFs top holdings are Bayer (diversified
SPDR S&P 500 ETF $191.30 (New York symbol SPY; chemicals), 8.9%; SAP (software), 7.6%; Siemens
buy or sell through brokers; www.spdrs.com) holds the stocks (engineering conglomerate), 7.3%; Allianz (insurin the S&P 500 Index, which consists of 500 major ance), 7.1%; Daimler (automobiles), 6.5%; BASF
U.S. companies chosen based on their market cap, (chemicals), 5.9%; Deutsche Telekom, 5.5%; Muliquidity and industry group. The funds MER is just nich Reinsurance, 3.1%; BMW AG, 2.7%; Fresenius
(health care), 2.5%; Linde AG (industrial gases),
0.10%, and it yields 2.5%.
2.4%; Deutsche Bank AG, 2.4%; and Deutsche Post
The indexs highest-weighted stocks are Apple, AG, 2.3%.
3.2%; Microsoft, 2.6%; Alphabet, 2.6%; ExxonLaunched on March 12, 1996, its expense ratio is
Mobil, 1.9%; Johnson & Johnson, 1.7%; General
Electric, 1.6%; Facebook, 1.5%; Berkshire Hathaway, 0.48%.
1.4%; Wells Fargo & Co., 1.4%; Amazon.com, 1.3%;
Weak European markets have slowed Germanys
AT&T, 1.3%; Procter & Gamble, 1.3%; and JPMorgrowth this year, while ongoing sanctions against
gan Chase, 1.3%.
Russia continue to hurt those German firms with a
The SPDR S&P 500 ETF is a top ETF pick for significant number of Russian customers. However,
the low euro remains a big plus for German exports,
2016.
and the long-term outlook for the economy is sound.
POWERSHARES QQQ ETF $101.65 (Nasdaq symbol
iShares MSCI Germany Fund is a top ETF pick
QQQ; buy or sell through brokers; www.
invescopowershares.com), formerly called Nasdaq 100 for 2016.

Published by The Successful Investor Inc. (416) 756-0888: www.TSINetwork.ca

Mid-February 2016

Canadian Wealth Advisor

Page 11

High yields from growing REITs

RIOCAN REAL ESTATE INVESTMENT
TRUST $25.02 (Toronto symbol REI.UN; Units
outstanding: 320.4 million; Market cap: $7.9 billion;
TSINetwork Rating: Average; Dividend yield: 5.6%;
www.riocan.com) is Canada's largest real estate
investment trust.
In the three months ended September 30, 2015,
RioCan's cash flow rose 5.0%, to $140.2 million
from $133.6 million a year earlier. Per-unit cash flow
gained 2.3%, to $0.44 from $0.43, on more units
outstanding.
The trust has now agreed to sell its 49 U.S. malls
for $1.2 billion (Canadian). It expects to complete the
sale in April 2016.
RioCan will put $510 million of the proceeds
toward its recent deal to buy out its joint venture with
U.S.-based Kimco Realty (New York symbol KIM).
Formed in 2000, this business owns and manages 35
malls in six provinces.
Under the deal, RioCan will acquire Kimcos 50%
stake in 22 of these properties for $715 million. The
partners then plan to sell 10 other properties. They
haven't yet made a decision about the last three,
which consist of stores vacated by Target in 2015.
The 22 properties RioCan will fully own fit well
with its plans to increase its exposure to Canada's six
largest markets: Toronto, Montreal, Ottawa, Calgary,
Edmonton and Vancouver.
RioCan trades at 14.1 times its forecast 2016 cash
flow of $1.78 a unit. Thats reasonable in light of the
REITs highly profitable properties and its 94.0%
occupancy rate. The units yield 5.6%.
RioCan is a buy.
ALLIED PROPERTIES REAL ESTATE
INVESTMENT TRUST $32.83 (Toronto symbol
AP.UN; Units outstanding: 78.3 million; Market cap:
$2.6 billion; TSINetwork Rating: Extra Risk;
Dividend yield: 4.6%; www.alliedreit.com) owns 147
office buildings, mostly in major Canadian cities.

These mainly Class I properties contain over 10.5

million square feet of leasable area.
Class I refers to 19th- and early-20th-century
industrial buildings that have been converted to retail
space. They usually feature exposed beams, interior
brick and hardwood floors.
Allied spent $400 million acquiring properties in
2012, $182.4 million in 2013 and $234.9 million in
2014. In the first three quarters of 2015, it added four
more for $164.4 million.
The new buildings helped raise the trusts revenue
by 5.6% in the quarter ended September 30, 2015, to
$90.7 million from $85.8 million a year earlier. Cash
flow rose 12.3%, to $42.9 million from $39.2
million. Cash flow per unit gained 1.9%, to $0.55
from $0.54, on more units outstanding.
The units trade at 12.6 times Allieds forecast
2016 cash flow of $2.61 a unit. They yield 4.6%.
Allied Properties REIT is a buy.

Torstar closes its printing plant

TORSTAR $2.21 (Toronto symbol TS.B; Shares
outstanding: 79.9 million; Market cap: $182.1
million; TSINetwork Rating: Average; Dividend
yield: 11.8%; www.torstar.com) will close its
money-losing printing plant in Vaughan,
Ontario, just north of Toronto, in July 2016. It
will then transfer printing of The Toronto Star
newspaper to Transcontinental Inc.
Torstar will also sell the Vaughan plant and
land. This will help offset its closing costs. It will
also give it more cash for Star Touch, the
tablet-newspaper app it launched in October.
So far, more than 200,000 users have downloaded Star Touch, which uses technology
licensed from Montreals La Presse newspaper.
The app should help Torstar attract younger
readers and sell more online ads.
Torstar is still a buy for long-term gains.

Published by The Successful Investor Inc. (416) 756-0888: www.TSINetwork.ca

Page 12

Canadian Wealth Advisor

Mid-February 2016

Two bargain buys for income and growth

GREAT-WEST LIFECO $34.22 (Toronto symbol
GWO; Shares outstanding: 993.4 million; Market
cap: $34.5 billion; TSINetwork Rating: Above
Average; Yield: 3.8%; www.greatwestlifeco.com) is
one of Canada's largest insurance firms. It also offers
mutual funds and wealth management. Power
Financial owns 67.2% of Great-West.
In the three months ended September 30, 2015,
Great-Wests earnings rose 4.3%, to $0.72 a share
from $0.69 a year earlier.
The company continues to benefit from two recent
acquisitions. In 2013, it paid $1.75 billion for Irish
Life, Ireland's largest pension manager and life
insurance provider. In 2015, it paid an undisclosed
sum for the Irish operations of Legal & General
Group plc, which provides investment and taxplanning services to wealthy individuals.
Growth by acquisition can be risky, but the
companys large size lets it take advantage of
opportunities with strong chances of success. GreatWest's expansion helped it end the latest quarter with
$1.15 trillion in assets under administration, up
12.9% from a year earlier.
The company raised its quarterly dividend by
6.0% with the March 2015 payment, to $0.326 from
$0.3075. The shares yield 3.8%. The stock trades at
just 11.7 times Great-Wests forecast 2016 earnings
of $2.93 a share.
Great-West Lifeco is still a buy.
MANULIFE FINANCIAL $18.16 (Toronto symbol
MFC; Shares outstanding: 2.0 billion; Market cap:
$37.9 billion; TSINetwork Rating: Above Average;
Dividend yield: 3.7%; www.manulife.ca) sells life
and other related forms of insurance, as well as
mutual funds and investment management services.
In the three months ended September 30, 2015,
Manulifes earnings per share, excluding one-time
items, gained 10.3%, to $0.43 from $0.39 a year
earlier. Revenue rose 16.2%, to $7.48 billion from
$6.44 billion.

The company continues to expand in growing

Asian markets. Right now, about 40% of its insurance
premiums come from that region.
Manulife ended the latest quarter with $888.0
billion of assets under management, up 34.0% from
$662.5 billion a year earlier. A large part of the
increase came from the Canadian insurance operations of U.K.-based Standard Life. Manulife bought
those assets for $4.0 billion in late 2014.
The stock trades at just 10.7 times its forecast
2016 earnings of $1.70 a share. Manulife raised its
quarterly dividend by 5.6% with the June 2015
payment, to $0.17 from $0.155. The shares yield
3.7%.
Manulife is a buy.

BNS looks to exit Thailand

BANK OF NOVA SCOTIA $55.78 (Toronto
symbol BNS; Shares outstanding: 1.2 billion;
Market cap: $67.8 billion; TSINetwork Rating:
Above Average; Dividend yield: 5.0%,
www.scotiabank.com) is considering selling all
or part of its 49% stake in Thailands Thanachart
Bank, which has a book value of $2.4 billion.
Like many Asian nations, Thailand prohibits
foreign firms from controlling domestic banks.
Economic weakness and political uncertainty
have also hurt loan demand in the country.
Bank of Nova Scotia would probably use the
proceeds from any sale to expand in Latin
America. The bank gets around 30% of its
earnings from its international operations.
In 2014, Bank of Nova Scotia acquired 51% of
the credit and consumer loan operations of
Chilean retailer Cencosud for $280 million U.S.
That made Scotiabank Chiles third-largest credit
card provider. In 2015, the bank acquired Citibanks retail banking businesses in Peru,
Panama and Costa Rica for $360 million U.S.
Bank of Nova Scotia is a buy.

Published by The Successful Investor Inc. (416) 756-0888: www.TSINetwork.ca

Mid-February 2016

Canadian Wealth Advisor

Page 13

Low oil prices could force dividend cuts

BONAVISTA ENERGY $1.83 (Toronto symbol
BNP; Shares outstanding: 211.7 million; Market cap:
$367.5 million; TSINetwork Rating: Extra Risk;
Dividend yield: 6.6%; www.bonavistaenergy.com)
explores for oil and gas in Alberta, Saskatchewan
and B.C. Its output is 75% gas and 25% oil.
In the quarter ended September 30, 2015, Bonavistas cash flow per share fell 26.7%, to $0.44 from
$0.60 a year earlier. Most of that drop came from
lower oil and gas prices; output rose 5.2%, to 78,599
barrels of oil equivalent a day from 74,720 barrels.
Like many producers, the company is cutting back
on exploration and development spending. In 2016, it
will devote $210 million to this purpose. Thats
down from the $283.4 million it spent in 2015, and
down sharply from its $639.6 million in 2014.
The lower spending will likely cut its production
in 2016 to between an average of 73,000 and 76,000
barrels per day. That reduction, along with low oil
and gas prices, will cut Bonavistas per-share cash
flow this year to an estimated $1.27, down 28.2%
from the $1.77 it will likely report for 2015. It had
cash flow of $2.69 a share in 2014.

110,794 barrels of oil equivalent per day (55% gas

and 45% oil), from 104,035 a year earlier. However,
that wasnt enough to offset sharply lower oil and
gas prices; cash flow per share fell 44.2%, to $0.58
from $1.04.
Like Bonavista, Enerplus will cut exploration
spending this year. Its outlays will now total $350.0
million, down 31.4% from $510.0 million in 2015. It
spent $811.0 million in 2014.
The lower spendingalong with Enerpluss plan
to produce less gas in the Marcellus Shale until
prices reboundwill cut its forecast 2016 production
to around 102,500 barrels of oil equivalent a day.
The company expects to generate cash flow of
$1.72 a share in 2016, based on todays low oil
prices, down from $2.67 in 2015 and $4.20 in 2014.
The stock trades at 2.5 times this years estimate. It
yields a high 8.3%, but the current dividend may not
be sustainable if energy prices remain low.
Enerplus Corp. is a hold.

ENB buys two big gas plants

The stock trades at just 1.4 times this years
forecast cash flow per share. Thats very low for a
company with strong potential to grow when oil and
gas prices recover. However, the $0.01-a-share
monthly dividend, which yields a very high 6.6%,
could be cut if oil and gas prices drop further.
Bonavista Energy is a hold.
ENERPLUS CORP. $4.34 (Toronto symbol ERF;
Shares outstanding: 206.5 million; Market cap:
$813.8 million; TSINetwork Rating: Extra Risk;
Dividend yield: 8.3%) produces oil and gas from
properties mainly in Alberta, Saskatchewan, B.C.,
North Dakota and Montana, as well as in the
Marcellus Shale, which passes through Pennsylvania,
New York, Ohio and West Virginia.
Enerplus increased its output by 6.5% in the three
months ended September 30, 2015, to an average of

ENBRIDGE INC. $47.87 (Toronto symbol ENB;

Shares outstanding: 856.7 million; Market cap:
$40.8 billion; TSINetwork Rating: Above
Average; Dividend yield: 4.4%;
www.enbridge.com) has agreed to buy two
natural gas processing plants and related
pipelines in northeastern B.C. from Murphy Oil
(New York symbol MUR).
These facilities purify raw gas from producers
in B.C.'s Montney region. They also have
long-term contracts with these clients, which
helps cut risk.
Enbridge will pay $538 million when it closes
the deal by March 31, 2016. To put that in
context, it earned $399 million, or $0.47 a
share, in its latest quarter.
Enbridge is still a hold.

Published by The Successful Investor Inc. (416) 756-0888: www.TSINetwork.ca

Page 14

Canadian Wealth Advisor

Mid-February 2016

Hold these precious metal ETFs for now

In 2011, gold shot up to a high of $1,950 U.S. an mine, refine or explore for silver. It was developed by
ounce, and silver reached a peak of $48.48.
Germany-based Structured Solutions AG.
Gold prices then fell steadily, hitting a low of
Canadian firms make up 58.0% of the funds
$1,050 in December 2015 for the first time since holdings, but it also includes miners in the U.S.
early 2010. The metal now trades at $1,143. Silver (12.3%) and Mexico (11.2%). Its MER is 0.65%.
also declined to a five-year low of $13.65 an ounce
in December 2015. It now trades at $14.68.
The ETFs top holdings are Fresnillo plc at 13.4%;
Tahoe Resources Inc., 12.9%; Silver Wheaton,
Longer term, gold and silver could well regain 12.7%; Industrias Penoles, 9.7%; Polymetal, 5.6%;
their 2011 highs. This would simply reflect the vast Pan American Silver, 4.8%; Primero Silver, 4.6%;
inflationary expansion in the U.S. money supply since First Majestic Silver, 4.5%; MAG Silver, 4.5%; Hecla
the 2008 financial crisis.
Mining, 4.5%; Alamos Gold, 4.4%; and Fortuna
Silver Mines, 3.8%.
Meanwhile, growth-promoting policies that gained
a following in the 2014 U.S. mid-term elections may
Global X Silver Miners ETF is a hold.
continue no matter which party wins this years
presidential race. This could increase tax collections
Uncertain outlook for copper
and cut the deficit. If that happens, gold and silver
could stay low.
GLOBAL X COPPER MINERS ETF $10.06
Still, if you want to hold gold or silver stocks,
these two ETFs offer top-quality global miners and
low fees.
ISHARES S&P/TSX GLOBAL GOLD INDEX
FUND $9.38 (Toronto symbol XGD; buy or sell through
brokers; ca.ishares.com) aims to mirror the performance
of the S&P/TSX Global Gold Index, which is made
up of 35 gold stocks from Canada and around the
world. The ETF began trading on March 23, 2001. Its
MER is 0.61%.
The funds top holdings are Barrick Gold at
14.3%; Newmont Mining, 13.1%; Goldcorp, 11.7%;
Franco-Nevada, 8.6%; Randgold Resources (ADR),
8.1%; Agnico-Eagle Mines, 8.0%; AngloGold Ashanti (ADR), 4.2%; and Gold Fields (ADR), 2.9%.
iShares S&P/TSX Global Gold Index is a hold.
GLOBAL X SILVER MINERS ETF $19.09 (New
York symbol SIL; buy or sell through brokers;
www.globalxfunds.com) tracks the Solactive Global Silver
Miners Index.

(New York symbol COPX; buy or sell through brokers;

www.globalxfunds.com) tracks the Solactive Global

Copper Miners Index, which includes 20 to 40

international companies that mine, refine or
explore for copper. Germany-based Structured
Solutions AG created this index.
Canadian firms make up 38.8% of the ETFs
holdings. It also includes companies based in
Australia (15.6%), Mexico (5.5%), Peru (5.4%)
and Poland (5.0%). The funds MER is 0.65%.
Its top holdings are Southern Copper at 6.9%;
Oz Minerals, 6.8%; CST Mining Group, 6.4%;
Kaz Minerals plc, 5.9%; Sandfire Resources,
5.9%; Grupo Mexico, 5.7%; Glencore plc, 5.4%;
Turquoise Hill, 5.4%; Lundin Mining, 5.4%;
Jiangxi Copper, 5.4%; Copper Mountain Mining,
5.3%; and Antofagasta plc, 4.6%.
Copper prices have fallen from over $4.50
U.S. a pound at the start of 2011 to just $2.11
today. Over the longer term, improving global
economies and uncertain supply should push
copper higher. In the near term, though, the
metals outlook is uncertain.
Global X Copper Miners ETF is a hold.

That index includes 25 international firms that

Published by The Successful Investor Inc. (416) 756-0888: www.TSINetwork.ca

Mid-February 2016

Canadian Wealth Advisor

Page 15

Updates on our safety-conscious stocks

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. Thats equal to 29% of its
$2.4-billion market cap.

4.6%; www.bce.ca) has formed a new partnership

with U.S.-based iHeartRadio, which streams live
radio stations and other audio broadcasts over the
Internet. iHeartRadio has more than 75 million users
in the U.S., Australia and New Zealand.
BCE plans to use iHeartRadios technology to
launch a free-to-use, advertising-supported streaming
service in Canada in mid-2016. This service will also
feature BCEs 106 radio stations, as well as other
content from its TV channels.
BCE is a buy.

Manitoba Telecom is still a hold.

TRANSCANADA CORP. $48.05 (Toronto symbol
TRP; Shares outstanding: 709.0 million; Market cap:
$34.0 billion; TSINetwork Rating: Above Average;
Dividend yield: 4.3%; www.transcanada.com) has
launched two legal challenges to the U.S.
governments 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.
TransCanada plans to appeal the U.S. decision
under the North American Free Trade Agreement and
will ask for $15 billion U.S. in damages. In a
separate case, it will challenge the U.S. president's
authority to deny a construction permit.
These trials will take several years to settle, and
theres no guarantee TransCanada will win. Even so,
by 2020, the company plans to complete $46 billion
worth of other pipelines and power plants. Cash flow
from these projects will let TransCanada raise its
dividend by 8% to 10% annually over the next five
years.
TransCanada is a buy.
BCE INC. $56.74 (Toronto symbol BCE; Shares
outstanding: 849.3 million; Market cap: $48.8 billion;
TSINetwork Rating: Above Average; Dividend yield:

IBMs cloud shift will pay off

IBM $124.72 (New York symbol IBM; Shares
outstanding: 970.1 million; Market cap: $137.4
billion; TSINetwork Rating: Above Average;
Dividend yield: 4.2%; www.ibm.com) reported
better-than-expected results in its latest quarter.
In the quarter ended December 31, 2015,
revenue fell 8.5%, to $22.06 billion from $24.11
billion a year earlier. However, that beat the
consensus of $22.04 billion. IBM gets 60% of its
revenue from outside the U.S., and the higher
U.S. dollar hurts the value of these sales.
The company continues to expand in fastergrowing areas like cloud computing and analytics software. In the latest quarter, IBMs cloud
and analytics businesses increased their revenue by 16%. That revenue now accounts for
35% of the company's total. It also helps offset
weaker demand for IBMs consulting services
and mainframe computers.
The companys earnings fell 18.6%, to $4.7
billion, or $4.84 a share, from $5.8 billion, or
$5.81 The latest earnings beat the consensus
estimate of $4.81 a share.
IBM will probably earn $14.98 a share in
2016, and the stock trades at just 8.3 times that
forecast. The shares yield 4.2%.
IBM is a buy for long-term gains.

Published by The Successful Investor Inc. (416) 756-0888: www.TSINetwork.ca

Page 16

Canadian Wealth Advisor

Mid-February 2016

Heres our CWA REIT & Trust Portfolio

The federal governments tax on income-trust distributions took effect on January 1, 2011. Most trusts
have since converted to corporations.
Real estate investment trusts (REITs) were exempted from the income-trust tax. As a result,
high-quality REITs should remain attractive to income-seeking investors.
Name

Price
$

Symbol**

Dist. Yield
$

35.72

BEP.UN

1.66u 6.2

Industry
Sector

Current
p/e

Canadian Wealth Advisor

Rating
Advice

Utilities

117.2

Extra Risk

Buy

Mfg.
Mfg.
Mfg.
Mfg.

8.7
16.2
10.1
16.6

Extra Risk
Extra Risk
Extra Risk
Average

Buy
Buy
Buy
Best Buy

Extra Risk
Extra Risk
Average
Extra Risk
Extra Risk
Extra Risk
Extra Risk
Average
Average
Average
Extra Risk
Average

Buy
Buy
Tendered
Hold
Buy
Hold
Buy
Buy
Buy
Hold
Buy
Buy

Income trusts
Brookfield

Real estate investment trusts (REITs)

Allied REIT
Canadian REIT
H&R REIT
RioCan REIT

32.83
40.96
18.72
25.02

AP.UN
REF.UN
HR.UN
REI.UN

1.50
1.80
1.35
1.41

4.6
4.4
7.2
5.6

& Ind.
& Ind.
& Ind.
& Ind.

Former income trusts that have converted to conventional corporations*

Algonquin Pwr. 11.87
ARC Resources 18.10
Bell Aliant
31.11
Bonavista
1.83
Crescent Point 14.77
Enerplus
4.34
Innergex Power 11.82
Pembina Pipeline 31.46
Pengrowth
1.08
Penn West
1.06
Peyto Energy
30.06
Veresen&
7.74

AQN
ARX
BA
BNP
CPG
ERF
INE
PPL
PGF
PWT
PEY
VSN

0.39u. 4.7
1.20 6.6
1.90 6.2
0.12 6.6
1.20 8.1
0.36 8.3
0.62 5.3
1.83 5.8
0.04 3.7
0.04 3.8
1.32 4.4
1.00 12.9

Utilities
Resources
Utilities
Resources
Resources
Resources
Utilities
Utilities
Resources
Resources
Resources
Utilities

28.7
d.
24.9
d.
d.
d.
d.
33.1
d.
d.
28.7
23.6

**Toronto Exchange unless otherwise noted. *Converted from income trust to corporation, .un suffix dropped from trading
symbol. Current p/e: current unit price divided by latest 12-month earnings.
Yield: distribution divided by unit price. d. loss.
& Name changed from Fort Chicago Energy Partners L.P.

Next Month: The CWA ETF Portfolio

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