Canadian Income Plus Portfolio

Transcription

1 Investment Objective The ScotiaMcLeod Canadian Income Plus Guided Portfolio is a lower risk portfolio of stocks and income trusts designed for conservative investors whose primary objective is regular income with modest capital appreciation. The portfolio comprises shares or trust units of conservative entities that are well established, financially strong, and have an excellent record of earnings and dividend growth. Diversification is achieved by making 10 to 15 investments over a minimum of four sectors. Selection Criteria Components of the Guided Portfolios are selected from the S&P/TSX Composite Index and/or the S&P/TSX Income Trust Index. In order to qualify for inclusion in any of the individual guided portfolios, companies must first satisfy a set of fundamental and quantitative criteria specific to those portfolios. For the Income Plus Portfolio, the criteria consist of: a) a dividend or cash distribution yield comprising a minimum of 40% of the current 10-year Government of Canada bond yield; b) a dividend or cash distribution policy with a steady track record and profile providing the potential for future growth; c)a minimum investment recommendation from Scotia Capital Equity Research of 2-Sector Perform; d) inclusion in the S&P/TSE Composite Index or S&P/TSX Income Trust Index; e) a minimum float capitalization of C$750 million; f) an acceptable level of average daily trading volume; g)an investment grade credit rating; h)continually achieve certain financial performance thresholds and volatility tests. Failure to satisfy any of these criteria will result in a position being removed from the Income Plus Portfolio and replaced by one that satisfies the portfolio s inclusion criteria. June 3, 2014 Page 1

2 Composition & Target Returns Risk Price Target Div. Target Company Name Sector Rating * Ranking 2JUN14 Div. Price Yield ROR Agrium Inc. (AGU) Basic Materials 1-SO Medium U$ U$ 3.00 U$ % 25.5 % Shaw Communications Inc. (SJR.B) Consumer Discretionary 1-SO Medium $ $ 1.10 $ % 14.4 % Baytex Energy Corporation (BTE) Energy 1-SO High $ $ 2.64 $ % 31.1 % Crescent Point Energy Corp. (CPG) Energy 1-SO Medium $ $ 2.76 $ % 29.7 % Enbridge Inc. (ENB) Energy 1-SO Low $ $ 1.40 $ % 18.5 % Gibson Energy Inc. (GEI) Energy 2-SP Medium $ $ 1.20 $ % -1.2 % TransCanada Corporation (TRP) Energy 2-SP Low $ $ 1.92 $ % 8.3 % Bank of Nova Scotia (BNS) Financials n.a. Low $ $ 2.56 $ % 9.7 % (BPY.UN) Financials n.a. n.a. U$ U$ 1.00 n.a. 4.2 % n.a. Manulife Financial Corporation (MFC) Financials 1-SO Medium $ $ 0.52 $ % 16.9 % Royal Bank of Canada (RY) Financials 1-SO Low $ $ 2.84 $ % 12.3 % TD Bank Financial Group (TD) Financials 1-SO Low $ $ 1.88 $ % 10.0 % Rogers Communications Inc. (RCI.B) Telecommunication Services 2-SP Medium $ $ 1.83 $ % 7.6 % TELUS Corporation (T) Telecommunication Services 2-SP Medium $ $ 1.52 $ % -2.4 % Brookfield Renewable Energy Partners LP (BEP.UN) Utilities n.a. n.a. $ $ 1.55 n.a. 5.0 % n.a. Total Portfolio 4.0% 13.9% * Rating definitions: * 1-SO = Sector Outperform * 2-SP = Sector Perform * 3-SU = Sector Underperform * T = Tender * UR = Under Review * R = Restricted June 3, 2014 Page 2

3 Stocks at a Glance Agrium Inc.(AGU) Agrium Inc. is the largest retail supplier of agricultural products and services in North America, a major producer of nitrogen, phosphate, and potash, and a supplier of specialty fertilizers in North America. Agrium s agricultural retail presence consists of nearly 1,000 outlets, scattered mostly throughout the United States, with some in Canada and South America. Its wholesale operations consist of 8.7 million (net) tonnes of capacity, split 62% nitrogen, 24% potash, and 14% phosphate. Brookfield Renewable Energy Partners L.P.(BEP.UN) Brookfield Renewable Energy Partners L.P. (BEP) is a pure-play renewable power company with around 4,800 MW of 170 hydroelectric and 5 wind assets in Canada, USA, and Brazil. Canadian hydro facilities are located primarily in ON and QC, with some in BC and New England. Commodity price risk is not material as plants are all under long-term contracts. Brookfield Asset Management remains the primary sponsor with a 68% ownership interest and as the counterparty to fixed-price PPAs comprising over half of the fund s output. BEP s development pipeline includes a focus on wind opportunities in Canada and hydro in Brazil. Bank of Nova Scotia (BNS) Bank of Nova Scotia is the third-largest Canadian chartered bank in terms of assets by market capitalization. The bank is comprised of three operating divisions: Domestic Banking including a significant Wealth Management operation, International Banking which includes an ownership interest of 97% in Grupo Scotiabank in Mexico, and wholesale activities through Scotia Capital Inc., a Canadian investment dealer with international investment banking operations. Baytex Energy Inc. (BTE) Baytex Energy Corporation is a Calgary based conventional oil and gas exploration and production company. BTE is engaged in the acquisition, development and production of crude oil and natural gas in the Western Canadian Sedimentary Basin and in the Williston Basin in the United States. Approximately 89% of Baytex s production is weighted toward crude oil, with a particular emphasis on heavy oil. The company s corporate strategy is founded upon maintaining its production and asset base through internal property development and delivering consistent returns to its shareholders. Brookfield Property Partners LP (BPY.UN) Brookfield Property Partners LP invests in real estate. The Company owns, operates and invests in commercial properties. Brookfield Property Partners focuses on properties located in North America, Europe, Australia and Brazil. Crescent Point Energy Corp.(CPG) Crescent Point Energy Corp. has had an active history since its inception in 2001, when it began as a junior energy company with 275 boe/d of production, followed by conversion into a trust in 2003, and finally back to a corporation in July The capital program for 2012 will be directed towards the company s tight oil resource plays focused on the Bakken, Lower Shaunavon, and Viking formations in southern Saskatchewan. As a corporation, Crescent Point has maintained its monthly dividend to shareholders and continues to operate a total return model which includes a combination of asset growth and cash yield. Enbridge Inc. (ENB) Enbridge Inc. (ENB) provides energy transportation, distribution and related services internationally. Enbridge owns and operates the largest crude oil pipeline in North America. Other investments include Enbridge Gas (100%), U.S.-based Enbridge Energy Partners (11%), Enbridge Income Fund (72%), Quebec-based Noverco (32%), the U.S. Alliance Pipeline (50%), the Vector Pipeline (60%), Colombia s OCENSA (25%), Spain s CLH (25%), and 100% of the Norman Wells, Athabasca Oil Pipelines as well as interests in 11 gas transmission and gathering pipelines in five major pipeline corridors in the Gulf of Mexico. The breakdown of revenue attributable to each business segment consists of: gas distribution and services 86%, liquid pipelines 9%, gas pipelines 3%, and sponsored investments 2%. President and CEO: Patrick Daniel. Gibson Energy INc.(GEI) Gibson Energy is a midstream infrastructure company servicing the oil industry as opposed to the natural gas industry. Its core assets include oil terminals located at Alberta s major hubs, Edmonton and Hardisty. These terminals have 3.3M bbl of storage capacity and move about 385k bbl/d of product. Gibson integrates truck transportation with the terminals and owns over 2,000 trailors. Other businesses include retail propane distribution (68M gallons annually), wellsite fluids (16k b/d of refinery capacity in Sask.), and marketing. GEI has been private since 1953 but went public when Riverstone sold a 38% stake in the 2011 IPO. Manulife Financial Corp (MFC) Manulife Financial Corporation (MFC) is a leading global financial services company providing financial protection, wealth and asset management products, and services to individuals and groups in 22 countries and territories worldwide. Products and services include individual and group life and health insurance, long-term-care protection, pension and annuity products and services, reinsurance, mutual funds, and institutional asset management. The company is the largest life insurer in North America and in the top five, by a number of measures, worldwide. Rogers Communication (RCI.B) Rogers operates the largest wireless carrier and cable TV operation in Canada, with 8.6M wireless customers, 2.29M cable customers, 1.64M Internet customers, and 1.07M telephone customers at 30 June It has major cable system clusters in Toronto, Ottawa, Mississauga, Kitchener, London (ON), NB, and NL. It owns 6.6M shares of CCA June 3, 2014 Page 3

4 (14%), 3.4M shares of CGO (20%), the Toronto Blue Jays, the Rogers Centre, TV and radio broadcasting and magazine publishing assets. Rogers Wireless represents over 70% of 2009 total EBITDA and 70% of our target NAV; cable contributes 23% to our target NAV. Royal Bank of Canada (RY) Royal Bank is the largest Canadian chartered bank in terms of assets and market cap. The bank owns investment dealer RBC Capital Markets and RBC Insurance. In the United States, the bank provides banking and wealth management services through RBC Centura and RBC Dain Rauscher. The bank comprises four main business segments: Canadian Banking, Wealth Management, U.S. and International Banking, and RBC Capital Markets. The breakdown of revenue attributable to each business segment consists of: commercial banking 53%, wealth management 18%, capital markets 18%, insurance 11%. President & CEO: Gordon Nixon. The ScotiaMcLeod Guided Portfolios are model portfolios of equity and fixed income securities designed for individual investors. Managed by the firm s Portfolio Advisory Group, the guided portfolios include Canadian and U.S. equity portfolios and Canadian fixed income portfolios. The objective of the equity portfolios is to provide individual investors with superior investment returns for various investment objectives and levels of risk. The objective of the fixed income portfolios is to track the performance of the Scotia Capital Markets Bond Universe index and its components. For further information on the Guided Portfolios, please contact your ScotiaMcLeod Investment Executive. Shaw Communications Inc.(SJR.B) Shaw Communications Inc. is the largest cable TV company in Canada, with 2.3 million basic cable subscribers, 1.8 million high-speed Internet subscribers, and 1.2 million VoIP (internet telephony) subscribers as at 28 Feb Shaw has major system clusters in Victoria, Vancouver, Calgary, Edmonton, Winnipeg, and Saskatoon. Shaw owns all of Cancom (including its DTH satellite TV operation with 906,000 subscribers) and conventional and specialty TV assets acquired last year through the purchase of CanWest s broadcasting business. Telus Corp. (T) TELUS is Canada s third-largest telecommunications company and the incumbent in Alberta, BC, and parts of Quebec. It offers local, long distance, data, wireless, and computer outsourcing services. As at 30 June 2010, TELUS serviced 3.84M network access lines (including its competitive local exchange carrier lines in Ontario and Quebec) and 1.13M high-speed Internet subscribers. TELUS Mobility provides service to approximately 6.69M wireless subscribers across Canada, and its HSPA, CDMA, and iden digital networks cover 95% of the Canadian population. Wireless contributed about 51% and 56% of TELUS s Q2/10 revenue and EBITDA, respectively. Toronto Dominion Bank (TD) Toronto-Dominion Bank (TD) is the second-largest Canadian chartered bank based on assets and the second-largest by market capitalization. The bank acquired 100% ownership in TD Banknorth Inc. in March/April The bank also holds a 45.0% interest in TD Ameritrade. The bank also acquired Commerce Bancorp in early TransCanada Corp. (TRP) TransCanada Corporation is the parent company of TransCanada PipeLines Limited. The Company is focused on natural gas transmission and power services. TransCanada s network of pipeline transports the majority of Western Canada s natural gas production to markets in Canada and the United States. The Company also has interests in power plants in Canada and the United States. June 3, 2014 Page 4

5 Disclosures Copyright 2010 Scotia Capital Inc. All rights reserved. This report has been prepared by Scotia Capital Inc. as a resource for its clients and may not be redistributed. While the information provided is believed to be accurate and reliable, neither Scotia Capital Inc. nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of such information. Nothing contained in this report is or should be relied upon as a promise or representation as to the future. This report is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation or particular needs of any specific person. Investors should seek advice regarding the appropriateness of investing in financial instruments and implementing investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. The pro forma and estimated financial information contained in this report, if any, is based on certain assumptions and management s analysis of information available at the time that this information was prepared, which assumptions and analysis may or may not be correct. There is no representation, warranty or other assurance that any projections contained in this report will be realized. Opinions, estimates and projections contained in this report are our own as of the date hereof and are subject to change without notice. The information and opinions contained in this report have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. Neither Scotia Capital Inc. nor its affiliates accepts any liability whatsoever for any loss arising from any use of this report or its contents. Enbridge Inc. Gibson Energy Inc. Manulife Financial Corporation National Bank of Canada Rogers Communications Inc. Royal Bank of Canada Shaw Communications Inc. TD Bank Financial Group TELUS Corporation TransCanada Corporation Scotia Capital (USA) Inc. or its affiliates expects to receive or intends to seek compensation for investment banking services in the next 3 months. Manulife Financial Corporation TELUS Corporation Scotia Capital (USA) Inc. had an investment banking services client relationship during the past 12 months. Agrium Inc. Bank of Nova Scotia Gibson Energy Inc. Rogers Communications Inc. Royal Bank of Canada The issuer paid a portion of the travel-related expenses incurred by the Fundamental Research Analyst/Associate to visit material operations of the following issuer(s): Baytex Energy Corporation Gibson Energy Inc. Scotia Capital Inc. and its affiliates collectively beneficially own in excess of 1% of one or more classes of the issued and outstanding equity securities of the following issuer(s): Bank of Montreal Canadian Imperial Bank of Commerce Enbridge Inc. Manulife Financial Corporation National Bank of Canada Rogers Communications Inc. Royal Bank of Canada Shaw Communications Inc. TD Bank Financial Group TransCanada Corporation The author(s) of the report own(s) securities of the following companies: Royal Bank of Canada Rogers Communications Inc. TD Bank Financial Group Enbridge Inc. Bank of Montreal TELUS Corporation TransCanada Corporation Manulife Financial Corporation Bank of Nova Scotia The supervisors of the Portfolio Advisory Group own securities of the following companies: Bank of Nova Scotia Scotia Capital (USA) Inc. or its affiliates has managed or co-managed a public offering in the past 12 months. Bank of Montreal Bank of Nova Scotia Baytex Energy Corporation Enbridge Inc. Gibson Energy Inc. Manulife Financial Corporation National Bank of Canada Rogers Communications Inc. Royal Bank of Canada Shaw Communications Inc. TD Bank Financial Group TELUS Corporation TransCanada Corporation Scotia Capital (USA) Inc. or its affiliates has received compensation for investment banking services in the past 12 months. Agrium Inc. Bank of Montreal Bank of Nova Scotia Baytex Energy Corporation Brookfield Renewable Energy Partners LP Crescent Point Energy Corp. June 3, 2014 Page 5 The Bank of Nova Scotia is the parent company and a related issuer of Scotia Capital Inc. and ultimate parent company and related issuer of Scotia Capital (USA) Inc. Bank of Nova Scotia The Fundamental Research Analyst/Associate has visited material operations of the following issuer(s): Agrium Inc. Baytex Energy Corporation Enbridge Inc. Gibson Energy Inc. Manulife Financial Corporation Rogers Communications Inc. Shaw Communications Inc. TELUS Corporation Within the last 12 months, Scotia Capital Inc. and/or its affiliates have undertaken an underwriting liability with respect to equity or debt securities of, or have provided advice for a fee with respect to, the following issuer(s): Bank of Montreal Bank of Nova Scotia Baytex Energy Corporation Enbridge Inc. Gibson Energy Inc. Manulife Financial Corporation National Bank of Canada Rogers Communications Inc. Royal Bank of Canada Shaw Communications Inc. TD Bank Financial Group TELUS Corporation TransCanada Corporation This issuer owns 5% or more of the total issued share capital of The Bank of Nova Scotia. Bank of Montreal Canadian Imperial Bank of Commerce Royal Bank of Canada TD Bank Financial Group

6 Comparative Canadian Bank Information Bank Symbol SC-Rec Risk Target Bank of Montreal BMO 2-SP Low $81 Bank of Nova Scotia BNS n.a. Low $74 CIBC CM 2-SP Low $103 National Bank NA 2-SP Low $49 Royal Bank RY 1-SO Low $81 Toronto-Dominion Bank TD 1-SO Low $57.5 June 3, 2014 Page 6