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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BOMBARDIER INC. $3.98 (www.bombardier.com) has won a$226-million U.S. contract to build 35 passenger railcars for Germany’s Abello Rail. The company will deliver these trains by December 2015. In addition, it announced new orders for its CSeries passenger jets worth up to $3.7 billion U.S....
SNC-LAVALIN GROUP INC. $42 (www.snclavalin.com) owns 50%of a joint venture that has won a contract to design and build a new natural-gas-fired power plant in New Jersey. Thanks to new turbines and other technology, this facility will be one of the most environmentally friendly power plants in the U.S....
RIOCAN REAL ESTATE INVESTMENT TRUST $27(www.riocan.com) is raising its monthly distribution by 2.2% with the January 2013 payment, to $0.1175 a unit from $0.115. The new annual rate of $1.41 yields 5.2%. This is the first increase since 2008. Buy.
CGI GROUP INC. $24 (Toronto symbol GIB.A;Aggressive Growth Portfolio, Manufacturing &Industry sector; Shares outstanding: 307.7 million;Market cap: $7.4 billion; Price-to-sales ratio: 1.5; No dividends paid; TSI Network Rating: Extra Risk;www.cgi.com) is Canada’s largest provider of computer outsourcing services. CGI helps its clients automate routine functions, like accounting and buying supplies. That makes them more efficient and lets them focus on their main businesses.

CGI was our #1 stock pick for 2010 and 2011.

Aiming for global growth

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TRANSCONTINENTAL INC. $11 (Toronto symbol TCL.A;Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 78.2 million; Market cap: $860.2 million; Price-to-sales ratio: 0.4; Dividend yield: 5.3%; TSI Network Rating: Average;www.tctranscontinental.com) has amended the terms of its contract to print the San Francisco Chronicle, which runs to 2024.

The newspaper’s print circulation is falling, so it needs fewer copies. To compensate, the Chronicle will pay Transcontinental$200 million U.S.

To put that in context, Transcontinental earned $149.4 million(Canadian), or $1.85 a share, in its 2012 fiscal year, which ended October 31, 2012. That’s down 3.8% from $155.3 million, or $1.92a share, in fiscal 2011. However, revenue rose 6.2%, to $2.1 billion from $2.0 billion, mainly because it bought new printing plants.That offset lower ad revenue at its newspapers, as well as the completion of a big contract to print census forms in 2011.

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LOBLAW COMPANIES LTD. $41 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 281.5 million; Market cap: $11.5 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.1%; TSI Network Rating: Above Average;www.loblaw.ca) has launched a new line of gluten free baked goods for people who can’t digest wheat.These products include breads, cakes and cookies.The company plans to launch more gluten-free foods over the next few months.

Only about 1% of the population has trouble digesting wheat, so consumer concerns about gluten levels could pass quickly. Even so, these products should help Loblaw attract more customers.

Loblaw is a buy.

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FORTIS INC. $34 (Toronto symbol FTS;Conservative Growth Portfolio, Utilities sector;Shares outstanding: 190.7 million; Market cap: $6.5billion; Price-to-sales ratio: 1.8;D i v i d e n d y i e l d : 3 . 6 % ;TSI Network Rating: Above Average; www.fortis.ca) has raised its quarterly dividend by3.3%, to $0.31 a share from$0.30. The new annual rate of$1.24 yields 3.6%. Fortis has raised its payout every year for the past 40 years.

The company should complete its takeover of CH Energy Group (New York symbol CHG)in the first quarter of 2013. CH is a regulated utility that supplies electricity to 300,000 customers in the Mid-Hudson River Valley in New York State.

Fortis will pay $1.5 billion U.S. for CH Energy, including assuming $500 million U.S. of debt. That’s a high 23% of the company’s market cap. Large acquisitions, even of stable regulated utilities like CH Energy, can come with unpleasant surprises.

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ENBRIDGE INC. $43 (Toronto symbol ENB;Conservative Growth Portfolio, Utilities sector;Shares outstanding: 799.9 million; Market cap: $34.4billion; Price-to-sales ratio: 1.4; Dividend yield: 2.9%;TSI Network Rating: Above Average;www.enbridge.com) has bought 50% of the Massifdu Sud wind project in Quebec. This is the company’s second wind power investment in that province.

Enbridge paid $170.0 million for its stake in this facility. That’s equal to 63.2% of the $269.0million, or $0.34 a share, that it earned in the three months ended September 30, 2012.

Wind farms don’t make money on their own, but operators profit from subsidies. This project has a20-year deal to sell its power to Hydro-Quebec.

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PENGROWTH ENERGY CORP. $4.97 (Toronto symbol PGF;Aggressive Growth Portfolio, Resources sector; Shares outstanding: 507.1 million; Market cap: $2.5 billion; Price-to-sales ratio: 1.6; Dividend yield: 9.7%; TSI Network Rating: Average;www.pengrowth.com) has agreed to sell its 10.02% interest in the Weburn oil project in Saskatchewan.

The company will receive $315 million when the deal closes by the end of January 2013. It will use the cash to pay down its long-term debt, which was $1.75 billion on September 30, 2012.That’s a high 70% of its market cap.

Pengrowth is a buy.

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IMPERIAL OIL LTD. $43 (Toronto symbol IMO;Conservative Growth Portfolio; Resources sector;Shares outstanding: 847.6 million; Market cap: $36.4billion; Price-to-sales ratio: 1.2; Dividend yield: 1.1%;TSI Network Rating: Average; www.imperialoil.ca)reported that its third quarter earnings jumped21.1%, to $1.0 billion, or $1.22 a share. A year earlier, it earned $859 million, or $1.01 a share.Cash flow per share rose 18.8%, to $1.52 from$1.28, while revenue gained 4.9%, to $8.3 billion from $7.9 billion.

Overall production fell 3.7%, to 285,000 barrels a day from 296,000 a year earlier, due to asset sales and maintenance shutdowns. However, earnings from oil refining and distribution (52% of the total)rose 97.1%.

The company will soon start up its 71%-owned Kearl oil sands project, which will increase its daily production by 78,100 barrels. Exxon Mobil Corp.(New York symbol XOM) owns the remaining29%. Exxon also owns 69.6% of Imperial.

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