A&W Revenue Royalties Income Fund (TSX: AW-U, OTC: AWRRF) reported disappointing first-quarter results. Royalty income grew just 0.6%, to C$7.4 million, on total sales growth of 0.6%, to C$245.2 million.

Although same-store sales declined 0.3%, royalty income still managed to grow thanks to the addition of 23 restaurants to the royalty pool, which now totals 861 restaurants.

Management primarily attributed the quarter’s performance to poor winter weather in most regions of Canada. But it also noted continuing weakness in the country’s foodservice industry, particularly in Alberta and Saskatchewan, where the local economies are still recovering from the energy crash.

Although the A&W restaurant chain in Canada was originally launched by the well-known American root beer brand, it hasn’t been part of that company since 1972.

In contrast to the sad remnants of the American franchise, the Canadian chain, which is now independently owned and operated, still enjoys considerable respect among fast-food consumers in the Great White North, particularly for its Burger Family and reputation for using better ingredients than competitors. In fact, after McDonald’s, A&W boasts the second-highest market share among the country’s fast-food chains, at around 16% based on total sales.

However, it should be noted that the income fund doesn’t actually own or operate any of the restaurants. Instead, the fund generates income through its ownership of the A&W trademarks, which it licenses to the restaurants and for which it receives a royalty equivalent to 3% of gross sales. Though the restaurant chain chose to monetize its own trademarks with this investment vehicle, it still gets some of that money back through its 21.2% stake in the fund.

While A&W’s monthly distribution remains unchanged, it’s still 6.4% higher than a year ago. The fund has grown its payout by 2.4% annually over the past five years.

Looking ahead, management expects new growth initiatives such as all-day breakfast sandwiches will help boost sales in addition, of course, to opening new locations.

The C$442 million income fund has low debt and covered its monthly payout by 1.24 times for the first quarter.

Since reporting earnings, A&W’s units have sold off and are now down 13.2% from their trailing year high and rapidly approaching the levels at which we added the fund to the portfolio last October. With a yield of 4.5%, A&W remains a buy below C$37, or US$28.

BCE Inc. (TSX: BCE, NYSE: BCE), one of the core holdings in our portfolio, grew first-quarter adjusted earnings per share by 2.4%, to C$0.87, on a 2.1% rise in sales, to C$5.4 billion.

This steady performance beat analyst profit estimates by 4.4%, for the fifth earnings beat in the past eight quarters. BCE also managed to eke out its third consecutive quarterly upside surprise, with sales exceeding forecasts by 0.3%.

The telecom giant’s wireless division continues to drive overall growth, with operating income from the business up 7.5% year over year, to C$818 million, accounting for nearly 37% of the company’s total operating profit.

To offset cutthroat pricing competition on smartphones, the wireless segment focused on growing its customer base—postpaid net additions jumped 38.7%, to nearly 36,000 subscribers—while maintaining pricing discipline on services, which boosted average revenue per user by 4.2%, to C$65.66. These results also got a partial lift from the closing of the C$4.2 billion Manitoba Telecom acquisition on March 21.

Although BCE’s wireless division generally sees somewhat higher customer churn than its two main rivals, postpaid churn was just 1.17% during the quarter, up 2 basis points from the prior year, but toward the low end of recent annual churn rates.

Meanwhile, BCE’s wireline and media segments more or less continue to tread water, though there are still profits to be wrung from each business.

Even in the wireless era, the wireline segment still accounts for more than 57% of operating income. The business managed to grow adjusted EBITDA (earnings before interest, taxation, depreciation, and amortization) by 0.4%, for the 11^th consecutive quarter of growth.

With the secular attrition of legacy phone service, the segment’s main drivers are broadband Internet and pay-TV. Customer additions in both areas were markedly lower than a year ago, but BCE continues to grind out gains through hard-nosed cost-cutting, which pushed margins to an industry-leading 42.3%.

The wireline segment is investing aggressively in the buildout of broadband fiber infrastructure and expects to rollout fiber connections to 1.1 million Montreal homes and businesses by the end of the year. That will bring the company’s total fiber connections to 3.6 million across seven provinces.

Bell Media continues to adapt to the rapidly changing media landscape, with higher sales from video on demand and streaming services helping segment operating income climb 1.3%, to C$751 million.

Overall, BCE’s total customer connections across all services grew 5.3%, to 22.1 million.

Looking ahead, management forecasts sales and adjusted EBITDA growth of 5% this year, based on the midpoint of its guidance ranges. These latest projections are a significant improvement from the prior quarter and reflect the inclusion of Manitoba Telecom.

At the same time, the company lowered its guidance range for adjusted earnings per share by 3.5%, to $3.30 to $3.40 from an earlier forecast of $3.42 to $3.52, due to expenses relating to the transaction. If BCE manages to hit the midpoint of the new range, this would mean full-year 2017 adjusted EPS would decline by 3.5%. Thereafter, analysts forecast earnings growth of around 6% annually through 2020.

BCE increased its dividend by 5.1% during the first quarter, to C$0.7175 per share, or C$2.87 annualized. Though leverage metrics continue to rise, the telecom still enjoys stable investment-grade credit ratings from the major agencies. Meanwhile, the company is still covering its dividend, though its payout ratio remains elevated, at 84.1%.

With a yield of 4.7%, BCE remains a buy below C$72, or US$53.

Canadian utility giant Fortis Inc. (TSX: FTS, NYSE: FTS) grew first-quarter adjusted earnings per share by 3.0%, to C$0.69, on a 29% rise in sales, to C$2.3 billion.

Nevertheless, this performance fell short of analyst expectations on both the top and bottom lines. Analysts likely had difficulty in forecasting how the U.S.-based transmission company ITC, which Fortis acquired last October, would affect earnings during its first full quarter of contributing toward consolidated results.

For its part, Fortis’ management noted that quarterly results were “heavily influenced” by the inclusion of ITC, which is already accretive to earnings. Although first-quarter results missed analyst estimates, Fortis says the integration of its newly acquired business is “going well,” with the final piece of financing undertaken during the quarter—a private placement of C$500 million worth of equity.

Beyond the ongoing integration of ITC, management noted a positive earnings impact from higher electric retail rates following the outcome of a rate case filed by Arizona-based utility subsidiary UNS.

Fortis is in the midst of a five-year C$13 billion plan to upgrade and expand its infrastructure. Regulated electric and gas operations in the U.S. and Canada will get the bulk of this investment, while part of this budget also includes C$3.5 billion to expand ITC’s transmission infrastructure.

These investments are expected to drive earnings growth of 5.5% annually through 2021, which will help the company achieved targeted dividend growth of 6% annually over the same period.

Although Fortis issued significant equity to finance its acquisition of ITC, the holding company is still heavily levered overall, in part because ITC already carried a substantial debt burden. Even so, Fortis still enjoys stable, investment-grade credit ratings from the major agencies.

However, there’s a pretty big divergence between the company’s “A-” rating from Standard & Poor’s and its Baa3 rating from Moody’s. Management says the company deserves a rating that’s at least one notch higher from Moody’s and is clearly interested in achieving an even higher rating over time.

We’re willing to grant Fortis time to absorb ITC, which should help credit metrics improve as the year progresses. But we’re less impressed with management’s willingness to use persuasion on the one hand, and equity issued via its dividend reinvestment program on the other, to improve its standing with Moody’s, especially with an ambitious capital-spending program underway.

Even by the inflated standards of its U.S. peers, Fortis’ balance sheet is fairly bloated. Management needs to get more serious about proactively reducing leverage over time.

The good news is that with largely regulated operations, Fortis has a low-risk business profile, which translates into significant indulgences from the credit raters. We’re patient too, but our patience is not infinite. With a yield of 3.7%, Fortis remains a buy below C$45, or US$34.