Dividend Stocks
Dividends can produce as much as a third of your total return over long periods, and you can even retire on dividends.
There are 4 key stock dividend dates that are involved with dividend payments:
1- The Declaration Date is several weeks in advance of a dividend payment—it’s when company’s board of directors sets the amount and timing of the proposed payment.
2- The Payable Date is the date set by the board on which the dividend will actually be paid out to shareholders.
3- The Record Date is for shareholders who hold the stock before the payable date and receive the dividend payment. That date is set any number of weeks before the payable date.
4-The Ex-Dividend Date is two business days before the record date and it’s when the shares begin to trade without their dividend. If you buy stocks one day or more before their ex-dividend date, you will still get the dividend. That’s when a stock is said to trade cum-dividend. If you buy on the ex-dividend date or later, you won’t get the dividend. The ex-dividend date is in place to allow pending stock trades to settle.
We think very highly of stocks that have been paying dividends for five or more years, at TSI Network. Many of these stocks fit in well with our three-part Successful Investor philosophy:
1- Invest mainly in well-established companies;
2- Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; Consumer; Finance; and Utilities);
3- Downplay or avoid stocks in the broker/media limelight.
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CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $79 and CU.X [class B voting] $79; Income Portfolio, Utilities sector; Shares outstanding: 128.6 million; Market cap: $10.1 billion; Price-to-sales ratio: 3.2; Dividend yield: 2.5%; TSINetwork Rating: Above A v e r a g e ; www.canadianutilities.com) distributes electricity and natural gas in Alberta. It also operates 18 power plants in Canada, Australia and the U.K. ATCO Ltd. (see right) owns 52.9% of the company.
In July 2011, Canadian Utilities bought an Australian natural gas distributor for $1.1 billion. This move, along with an expansion of its power transmission grid in Alberta, continues to benefit the company. These new assets have also helped offset lower revenue from its Alberta power plants due to planned maintenance shutdowns.
As a result, the company’s earnings rose 13.1% in 2012, to a record $561 million, or $4.11 a share. The new Australian business contributed $26 million to that total. In 2011, Canadian Utilities earned $496 million, or $3.65 a share. Revenue rose 4.7%, to $3.1 billion from $3.0 billion.
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In July 2011, Canadian Utilities bought an Australian natural gas distributor for $1.1 billion. This move, along with an expansion of its power transmission grid in Alberta, continues to benefit the company. These new assets have also helped offset lower revenue from its Alberta power plants due to planned maintenance shutdowns.
As a result, the company’s earnings rose 13.1% in 2012, to a record $561 million, or $4.11 a share. The new Australian business contributed $26 million to that total. In 2011, Canadian Utilities earned $496 million, or $3.65 a share. Revenue rose 4.7%, to $3.1 billion from $3.0 billion.
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TORSTAR CORP. $7.00 (Toronto symbol TS.B; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 79.7 million; Market cap: $557.9 million; Price-to-sales ratio: 0.4; Dividend yield: 7.5%; TSINetwork Rating: Above Average; www- .torstar.com) continues to struggle with falling newspaper ad sales, particularly at The Toronto Star, its flagship paper. Strong competition and unfavourable foreign exchange rates are also hurting profits at wholly owned Harlequin Enterprises, the world’s leading romance novel publisher.
In 2012, Torstar’s revenue fell 4.1%, to $1.49 billion from $1.55 billion in 2011. Earnings fell 52.6%, to $103.2 million, or $1.29 a share, from $217.7 million, or $2.72 a share. If you disregard writedowns and other unusual items, earnings per share would have declined 25.0%, to $1.35 from $1.80.
To improve its profitability, Torstar continues to cut jobs and sell surplus real estate. Since 2010, these moves have cut its annual costs by $34.4 million. In 2013, annual savings should rise to $50.0 million.
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In 2012, Torstar’s revenue fell 4.1%, to $1.49 billion from $1.55 billion in 2011. Earnings fell 52.6%, to $103.2 million, or $1.29 a share, from $217.7 million, or $2.72 a share. If you disregard writedowns and other unusual items, earnings per share would have declined 25.0%, to $1.35 from $1.80.
To improve its profitability, Torstar continues to cut jobs and sell surplus real estate. Since 2010, these moves have cut its annual costs by $34.4 million. In 2013, annual savings should rise to $50.0 million.
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ENBRIDGE INC. $46 (Toronto symbol ENB; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 806.5 million; Market cap: $37.1 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.enbridge.com) operates pipelines that pump crude oil and natural gas from western Canada to customers in eastern Canada and the U.S. The company’s pipelines handle around 65% of all western Canadian crude oil exports.
Pipelines supply 90% of Enbridge’s revenue. The remaining 10% mainly comes from distributing gas to 2 million consumers in Ontario, Quebec, New Brunswick and New York State.
Enbridge’s revenue fell 22.7%, from $16.1 billion in 2008 to $12.5 billion in 2009, as the recession cut gas sales and prices. In 2010, the company started up the $3.5-billion Alberta Clipper pipeline, which pumps oil from Alberta to refineries in Illinois. That helped push up Enbridge’s revenue by 103.0% in 2012, to $25.3 billion.
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Pipelines supply 90% of Enbridge’s revenue. The remaining 10% mainly comes from distributing gas to 2 million consumers in Ontario, Quebec, New Brunswick and New York State.
Enbridge’s revenue fell 22.7%, from $16.1 billion in 2008 to $12.5 billion in 2009, as the recession cut gas sales and prices. In 2010, the company started up the $3.5-billion Alberta Clipper pipeline, which pumps oil from Alberta to refineries in Illinois. That helped push up Enbridge’s revenue by 103.0% in 2012, to $25.3 billion.
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BCE INC. $45 (www.bce.ca) purchased The Source chain of 700 mall-based electronic stores in 2009. This ear, it plans to open 20 new outlets. These stores give BCE a low-risk way to promote its mobile phones and TV services. Best Buy.
CANADIAN UTILITIES LTD. $74 (www.canadianutilities.com) has raised its dividend every year since 1972. The new annual rate of $1.94 a share, up 9.6% from $1.77, yields 2.6%. Buy.
ATCO LTD. $83 (www.atco.com) has raised its quarterly dividend by 14.5%, to $0.375 a share from 0.3275. The new annual rate of $1.50 yields 1.8%. The company has raised its dividend each year for the past 20 years. Moreover, at current rices, you can buy a share of ATCO for $83 and get roughly $86 worth of 52.8%-owned subsidiary Canadian Utilities (see below)....
AGRIUM INC. $114 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 149.4 million; Market cap: $17.0 billion; Price-to-sales ratio: 1.1; Dividend yield: 1.8%; TSINetwork Rating: Average; www.agrium.com) has soared 60% in the past year. That’s mainly because activist investment firm Jana Partners wants Agrium to spin off its retail business as a separate company. Jana owns 6% of Agrium’s shares.
The retail division has 1,250 stores in North America, South America and Australia that sell seed, fertilizer and other products to farmers. These outlets supply 60% of Agrium’s revenue. The remaining 40% mainly comes from making fertilizers from natural gas.
The retail division has 1,250 stores in North America, South America and Australia that sell seed, fertilizer and other products to farmers. These outlets supply 60% of Agrium’s revenue. The remaining 40% mainly comes from making fertilizers from natural gas.
Retail stores add stability
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IMPERIAL OIL LTD. $44 (Toronto symbol IMO; Conservative Growth Portfolio; Resources sector; Shares outstanding: 847.6 million; Market cap: $37.3 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.1%; TSINetwork Rating: Average; www.imperialoil.ca) now estimates that the first phase of its 71%-owned Kearl oil sands project will cost $12.9 billion. That’s up 18.3% from its earlier forecast of $10.9 billion. Exxon Mobil Corp. (New York symbol XOM) owns the remaining 29% of Kearl. Exxon also owns 69.6% of Imperial.
Shipping delays and unusually cold winter weather have slowed Kearl’s development and boosted its costs. Imperial now aims to start production by the end of March 2013.
Kearl’s first phase will produce 110,000 barrels a day (Imperial’s share is 78,100 barrels) by the end of 2013. Kearl’s second phase, which will cost $8.9 billion, will add a further 78,100 barrels to Imperial’s daily production by late 2015. To put these figures in context, the company produced an average of 282,000 barrels of oil equivalent a day in 2012.
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Shipping delays and unusually cold winter weather have slowed Kearl’s development and boosted its costs. Imperial now aims to start production by the end of March 2013.
Kearl’s first phase will produce 110,000 barrels a day (Imperial’s share is 78,100 barrels) by the end of 2013. Kearl’s second phase, which will cost $8.9 billion, will add a further 78,100 barrels to Imperial’s daily production by late 2015. To put these figures in context, the company produced an average of 282,000 barrels of oil equivalent a day in 2012.
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CANADA BREAD CO. LTD. $52 (Toronto symbol CBY; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 25.4 million; Market cap: $1.3 billion; Price-to-sales ratio: 0.8; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.canadabread.ca) is closing its bakeries in Grand Falls, New Brunswick, and Edmonton, Alberta. It will shift production from these facilities to other plants.
The company did not say how much these closures will save it. However, it expects to pay $6.3 million in severance and other related costs. That’s equal to 26% of the $24.2 million, or $0.95 a share, that Canada Bread earned in the three months ended September 30, 2012.
Canada Bread is still a hold.
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The company did not say how much these closures will save it. However, it expects to pay $6.3 million in severance and other related costs. That’s equal to 26% of the $24.2 million, or $0.95 a share, that Canada Bread earned in the three months ended September 30, 2012.
Canada Bread is still a hold.
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TRANSCONTINENTAL INC. $12 (Toronto symbol TCL.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 78.2 million; Market cap: $938.4 million; Price-to-sales ratio: 0.4; Dividend yield: 4.8%; TSINetwork Rating: Average; www.tctranscontinental.com) has paid an undisclosed sum for privately held Groupe Modulo, which publishes Frenchlanguage textbooks for schools and universities across Canada.
Many traditional book publishers have suffered due to rising competition from cheaper e-books. However, specialized textbooks are still highly profitable, and the purchase looks like a nice fit with Transcontinental’s current textbook business: it will expand the company’s catalogue of French-language titles to 11,000 from 8,000.
Moreover, adding Groupe Modulo’s high-quality titles would be a plus for Transcontinental if it decides to expand its own electronic-textbook business.
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Many traditional book publishers have suffered due to rising competition from cheaper e-books. However, specialized textbooks are still highly profitable, and the purchase looks like a nice fit with Transcontinental’s current textbook business: it will expand the company’s catalogue of French-language titles to 11,000 from 8,000.
Moreover, adding Groupe Modulo’s high-quality titles would be a plus for Transcontinental if it decides to expand its own electronic-textbook business.
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