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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PRECISION DRILLING CORP. $6.85 (Toronto symbol PD; Aggressive Growth Portfolio, Resource sector; Shares outstanding: 276.3 million; Market cap: $1.9 billion; Price-to-sales ratio: 0.9; No dividends paid since February 2009; TSINetwork Rating: Extra Risk; www.precisiondrilling.com) provides contract-drilling services to land-based oil and gas producers in Canada, the U.S. and Mexico. It had 344 rigs in service as of March 31, 2012.
The stock is down 45.6% from its recent peak of $12.60 in March 2012. That’s due to fears that falling oil and natural gas prices will hurt demand for Precision’s rigs. However, the company operates under long-term contracts that help shield it from volatile oil and gas prices. It has 122 rigs under contract in 2012 and 79 in 2013.
Precision can also conserve cash by putting off building new rigs if demand weakens. That’s why it recently cut its 2012 capital expenditures to $975 million from its earlier forecast of $1.1 billion.
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The stock is down 45.6% from its recent peak of $12.60 in March 2012. That’s due to fears that falling oil and natural gas prices will hurt demand for Precision’s rigs. However, the company operates under long-term contracts that help shield it from volatile oil and gas prices. It has 122 rigs under contract in 2012 and 79 in 2013.
Precision can also conserve cash by putting off building new rigs if demand weakens. That’s why it recently cut its 2012 capital expenditures to $975 million from its earlier forecast of $1.1 billion.
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TRANSCANADA CORP. $43 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 704.0 million; Market cap: $30.3 billion; Price-to-sales ratio: 3.5; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.transcanada.com) is now building its Keystone XL pipeline in sections. In January 2012, the U.S. government rejected the full project, which aims to pump crude oil from Alberta to refineries on the U.S. Gulf Coast.
The company will soon start work on the southern section, from Oklahoma to Texas. It has now changed its path for the northern section and reapplied for the necessary permit.
TransCanada is a buy.
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The company will soon start work on the southern section, from Oklahoma to Texas. It has now changed its path for the northern section and reapplied for the necessary permit.
TransCanada is a buy.
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PENGROWTH ENERGY CORP. $6.13 (Toronto symbol PGF; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 364.5 million; Market cap: $2.2 billion; Price-to sales ratio: 1.5; Dividend yield: 7.8%; TSINetwork Rating: Average; www.pengrowth.com) is cutting its monthly dividend by 42.9%, to $0.04 a share from $0.07, starting with the August 2012 payment. The new annual dividend rate of $0.48 yields 7.8%.
The company’s selling prices for oil and natural gas are falling, and it wants to conserve cash for acquisitions and investments in new projects like its Lindbergh oil sands development in Alberta.
Lindbergh should begin operating in 2015, and will increase Pengrowth’s production by a third by 2018. The project’s reserves should last 25 years.
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The company’s selling prices for oil and natural gas are falling, and it wants to conserve cash for acquisitions and investments in new projects like its Lindbergh oil sands development in Alberta.
Lindbergh should begin operating in 2015, and will increase Pengrowth’s production by a third by 2018. The project’s reserves should last 25 years.
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CANADIAN IMPERIAL BANK OF COMMERCE $72 (Toronto symbol CM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 404.9 million; Market cap: $29.2 billion; Price-to-sales ratio: 2.3; Dividend yield: 5.0%; TSINetwork Rating: Above Average; www.cibc.com) is Canada’s fifth-largest bank, with total assets of $387.5 billion.
CIBC’s exposure to the five most troubled European countries was just $354 million when its fiscal 2012 second quarter ended on April 30, 2012. That’s down from $363 million on January 31, 2012 (the bank did not provide comparable figures for the end of fiscal 2011).
These amounts are small next to the $766 million, or $1.90 a share, that CIBC earned in its latest quarter. That’s up 6.1% from $722 million, or $1.80 a share, a year earlier. Without unusual items, earnings per share would have risen 9.3%, to $2.00 from $1.83. Revenue rose 2.3%, to $3.1 billion from $3.0 billion. Low interest rates continue to spur demand for loans. The bank also saw higher gains from the portfolio of securities it holds.
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CIBC’s exposure to the five most troubled European countries was just $354 million when its fiscal 2012 second quarter ended on April 30, 2012. That’s down from $363 million on January 31, 2012 (the bank did not provide comparable figures for the end of fiscal 2011).
These amounts are small next to the $766 million, or $1.90 a share, that CIBC earned in its latest quarter. That’s up 6.1% from $722 million, or $1.80 a share, a year earlier. Without unusual items, earnings per share would have risen 9.3%, to $2.00 from $1.83. Revenue rose 2.3%, to $3.1 billion from $3.0 billion. Low interest rates continue to spur demand for loans. The bank also saw higher gains from the portfolio of securities it holds.
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BANK OF MONTREAL $58 (Toronto symbol BMO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 643.4 million; Market cap: $37.3 billion; Price-to-sales ratio: 2.4; Dividend yield: 4.8%; TSINetwork Rating: Above Average; www.bmo.com) is Canada’s fourth-largest bank, with assets of $525.5 billion.
The bank’s exposure to troubled European countries was a moderate $1.3 billion on April 30, 2012. That’s up from $1.0 billion three months earlier (it didn’t report comparable results for the end of fiscal 2011). The rise is mainly due to an increase in short-term loans to clients in Italy.
In the quarter ended April 30, 2012, Bank of Montreal’s earnings rose 27.5%, to $982 million from $770 million a year earlier. That mainly reflects the contribution from U.S. banking firm Marshall & Ilsley, which Bank of Montreal bought for $4.0 billion in stock in July 2011. Because of extra shares outstanding, earnings per share rose at a slower pace of 15.2%, to $1.44 from $1.25.
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The bank’s exposure to troubled European countries was a moderate $1.3 billion on April 30, 2012. That’s up from $1.0 billion three months earlier (it didn’t report comparable results for the end of fiscal 2011). The rise is mainly due to an increase in short-term loans to clients in Italy.
In the quarter ended April 30, 2012, Bank of Montreal’s earnings rose 27.5%, to $982 million from $770 million a year earlier. That mainly reflects the contribution from U.S. banking firm Marshall & Ilsley, which Bank of Montreal bought for $4.0 billion in stock in July 2011. Because of extra shares outstanding, earnings per share rose at a slower pace of 15.2%, to $1.44 from $1.25.
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BANK OF NOVA SCOTIA $53 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.1 billion; Market cap: $58.3 billion; Price-to-sales ratio: 3.4; Dividend yield: 4.2%; TSINetwork Rating: Above Average; www.scotiabank.com) is Canada’s third-largest bank, with assets of $659.7 billion.
Scotia’s overseas operations now supply 30% of its earnings. It prefers to focus on fast-growing regions like Asia and Latin America instead of Europe. The bank holds $2.5 billion of securities from troubled European countries, mainly Italy and Spain, down from $2.6 billion six months ago.
To put these figures in context, Bank of Nova Scotia earned $1.5 billion in the three months ended April 30, 2012. That’s up 16.1% from $1.3 billion a year earlier. Earnings per share rose 8.5%, to $1.15 from $1.06, on more shares outstanding. Revenue rose 1.4%, to $4.7 billion from $4.6 billion.
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Scotia’s overseas operations now supply 30% of its earnings. It prefers to focus on fast-growing regions like Asia and Latin America instead of Europe. The bank holds $2.5 billion of securities from troubled European countries, mainly Italy and Spain, down from $2.6 billion six months ago.
To put these figures in context, Bank of Nova Scotia earned $1.5 billion in the three months ended April 30, 2012. That’s up 16.1% from $1.3 billion a year earlier. Earnings per share rose 8.5%, to $1.15 from $1.06, on more shares outstanding. Revenue rose 1.4%, to $4.7 billion from $4.6 billion.
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TORONTO-DOMINION BANK $80 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; Shares outstanding: 908.2 million; Market cap: $72.7 billion; Price-to-sales ratio: 3.2; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www.td.com) is Canada’s second-largest bank, with total assets of $773.2 billion.
TD is also cutting its exposure to troubled European countries. It held $691 million of investments from these nations on April 30, 2012, down from $1.0 billion on October 31, 2011.
The bank earned $1.7 billion in its second quarter, up 13.9% from $1.5 billion a year earlier. Earnings per share rose 11.7%, to $1.82 from $1.63, on more shares outstanding. These gains are largely the result of TD’s recent $6.8-billion purchase of MBNA’s Canadian credit card business. Revenue rose 11.5%, to $5.8 billion from $5.2 billion.
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TD is also cutting its exposure to troubled European countries. It held $691 million of investments from these nations on April 30, 2012, down from $1.0 billion on October 31, 2011.
The bank earned $1.7 billion in its second quarter, up 13.9% from $1.5 billion a year earlier. Earnings per share rose 11.7%, to $1.82 from $1.63, on more shares outstanding. These gains are largely the result of TD’s recent $6.8-billion purchase of MBNA’s Canadian credit card business. Revenue rose 11.5%, to $5.8 billion from $5.2 billion.
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BOMBARDIER INC. (Toronto symbols BBD.A $4.06 and BBD.B $4.01; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $6.9 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.5%; TSINetwork Rating: Average; www.bombardier.com) has traditionally been a maker of smaller aircraft, such as business jets and regional planes.
The company is now adding larger models, such as its upcoming CSeries jets, which seat between 100 and 150 passengers. Bombardier is still developing and testing the CSeries, but it aims to deliver the first plane in the next 18 months.
Even with the current economic uncertainty, the company recently announced new orders for a total of 35 CSeries planes.
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The company is now adding larger models, such as its upcoming CSeries jets, which seat between 100 and 150 passengers. Bombardier is still developing and testing the CSeries, but it aims to deliver the first plane in the next 18 months.
Even with the current economic uncertainty, the company recently announced new orders for a total of 35 CSeries planes.
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METRO INC. $53 (Toronto symbol MRU; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 98.9 million; Market cap: $5.2 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.6%; TSINetwork Rating: Average; www.metro.ca) is Canada’s third-largest supermarket operator, after Loblaw and Sobeys. The company has about 600 supermarkets in Quebec and Ontario. It also operates 260 drugstores under the Brunet, The Pharmacy and Drug Basics banners.
Metro’s sales rose 7.4%, from $10.6 billion in 2007 to $11.4 billion in 2011 (fiscal years end September 30). Earnings fell 5.0%, from $295.6 million in 2007 to $280.8 million in 2008. Metro is an aggressive buyer of its own shares. Because of fewer shares outstanding, per-share earnings fell 2.4%, from $2.54 to $2.48.
However, earnings turned around in 2009, rising 27.8%, to $359.0 million, or $3.23 share. That’s mainly because the company lowered its advertising costs by converting its various banners in Ontario to the Metro brand. Earnings continued to rise, and reached $400.6 million, or $3.87 a share, in 2011.
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Metro’s sales rose 7.4%, from $10.6 billion in 2007 to $11.4 billion in 2011 (fiscal years end September 30). Earnings fell 5.0%, from $295.6 million in 2007 to $280.8 million in 2008. Metro is an aggressive buyer of its own shares. Because of fewer shares outstanding, per-share earnings fell 2.4%, from $2.54 to $2.48.
However, earnings turned around in 2009, rising 27.8%, to $359.0 million, or $3.23 share. That’s mainly because the company lowered its advertising costs by converting its various banners in Ontario to the Metro brand. Earnings continued to rise, and reached $400.6 million, or $3.87 a share, in 2011.
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When we go through the many comments we receive from TSI Network readers, the subject that seems to come up most often is dividend stocks. That’s not surprising, perhaps, since the first principle in our 3-part investment strategy is to mainly buy well-established, dividend-paying stocks. Another subject that draws many questions and strong opinions from our readers is retirement planning. And the idea of planning your retirement around dividends is one that appeals to many investors. When Pat replied to a specific question on this strategy two and a half months ago, it became the most watched of the weekly videos he has posted on the network over the past four months. It seems like a good time to have another look at this video, particularly because Pat’s answer holds a word of caution for investors: simply buying and holding dividend stocks may not be quite enough to accomplish your goals....