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 IMPERIAL BANK OF COMMERCE $75 (Toronto symbol CM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 402.7 million; Market cap: $30.2 billion; Price-to-sales ratio: 1.9; Dividend yield: 4.8%; TSINetwork Rating: Above Average; www.cibc.com) is Canada’s fifth-largest bank, with total assets of $391.4 billion.
CIBC plans to sell FirstLine, which provides mortgages through third-party brokers, and instead build up its in-house mortgage business.
The bank should earn higher profits from its mortgages as a result. It will also be able to promote credit cards and other products to its mortgage clients. CIBC aims to complete the sale over the next few months.
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CIBC plans to sell FirstLine, which provides mortgages through third-party brokers, and instead build up its in-house mortgage business.
The bank should earn higher profits from its mortgages as a result. It will also be able to promote credit cards and other products to its mortgage clients. CIBC aims to complete the sale over the next few months.
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BANK OF MONTREAL $58 (Toronto symbol BMO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 640.4 million; Market cap: $37.1 billion; Price-to-sales ratio: 2.0; Dividend yield: 4.8%; TSINetwork Rating: Above Average; www.bmo.com) is Canada’s fourth-largest bank, with assets of $538.3 billion.
Bank of Montreal continues to profit from last year’s purchase of U.S. banking firm Marshall & Ilsley Corp. for $4.0 billion in stock. That more than doubled the number of branches Bank of Montreal operates in the U.S. It also added 2 million customers. The bank now gets 20% of its revenue and earnings from its U.S. retail banking operations.
Meanwhile, the bank’s earnings rose 19.3% in the quarter ended January 31, 2012, to $953 million from $799 million a year ago. Earnings per share rose 7.6%, to $1.42 from $1.32, on more shares outstanding. These figures exclude unusual items, such as costs to integrate the new U.S. operations.
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Bank of Montreal continues to profit from last year’s purchase of U.S. banking firm Marshall & Ilsley Corp. for $4.0 billion in stock. That more than doubled the number of branches Bank of Montreal operates in the U.S. It also added 2 million customers. The bank now gets 20% of its revenue and earnings from its U.S. retail banking operations.
Meanwhile, the bank’s earnings rose 19.3% in the quarter ended January 31, 2012, to $953 million from $799 million a year ago. Earnings per share rose 7.6%, to $1.42 from $1.32, on more shares outstanding. These figures exclude unusual items, such as costs to integrate the new U.S. operations.
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p>TORONTO-DOMINION BANK $83 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; Shares outstanding: 909.2 million; Market cap: $75.5 billion; Price-to-sales ratio: 2.7; Dividend yield: 3.5%; TSINetwork Rating: Above Average; www.td.com) is Canada’s second-largest bank, with total assets of $773.7 billion. In December 2011, TD completed its $6.8-billion purchase of MBNA’s Canadian credit card operations from Bank of America (New York symbol BAC). These assets are a great fit for TD: They added 1.8 million clients to its 4.0 million credit card accounts. As well, MBNA is the largest MasterCard issuer in Canada. That diversifies TD’s credit card business beyond its current Visa cards.
The MBNA division should add $0.05 a share to TD’s annual earnings in the first year, and $0.10 a share thereafter.
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The MBNA division should add $0.05 a share to TD’s annual earnings in the first year, and $0.10 a share thereafter.
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ROYAL BANK OF CANADA $56 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.4 billion; Market cap: $78.4 billion; Price-to-sales ratio: 2.2; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.rbc.com) is Canada’s largest bank, with $815.0 billion of assets.
The U.S. Commodity Futures Trading Commission (CFTC) recently accused Royal of using a complex series of trades to cut its tax bill in Canada. Specifically, the CFTC says that divisions of the bank bought Canadian and U.S. dividend-paying stocks (plus futures contracts on these stocks) and quickly sold them to other divisions. These transactions would let Royal earn tax credits on the dividends it received from these holdings.
The CFTC claims that this process was a wash trade, in which the bank artificially set prices for these transactions, instead of letting the market determine the prices. Royal has denied these allegations, and we agree with Royal. As well, any potential fine would likely be small next to Royal’s earnings.
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The U.S. Commodity Futures Trading Commission (CFTC) recently accused Royal of using a complex series of trades to cut its tax bill in Canada. Specifically, the CFTC says that divisions of the bank bought Canadian and U.S. dividend-paying stocks (plus futures contracts on these stocks) and quickly sold them to other divisions. These transactions would let Royal earn tax credits on the dividends it received from these holdings.
The CFTC claims that this process was a wash trade, in which the bank artificially set prices for these transactions, instead of letting the market determine the prices. Royal has denied these allegations, and we agree with Royal. As well, any potential fine would likely be small next to Royal’s earnings.
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PENGROWTH ENERGY CORP. $8.96 (Toronto symbol PGF; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 360.3 million; Market cap: $3.2 billion; Price-to-sales ratio: 2.1; Dividend yield: 9.4%; TSINetwork Rating: Average; www.pengrowth.com) has a long history of using acquisitions to expand, which adds risk. However, these purchases have increased its reserves and cash flow.
Its latest acquisition is NAL Energy Corp. (Toronto symbol NAE). NAL investors will receive 0.86 of a Pengrowth common share for each share they hold. That will give them 26% of the combined company. The deal should close by May 31, 2012.
Adding NAL’s properties in Alberta and B.C. (54% natural gas and 46% oil) will increase Pengrowth’s projected 2012 production by about 16%, to between 86,000 and 89,000 barrels of oil equivalent a day.
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Its latest acquisition is NAL Energy Corp. (Toronto symbol NAE). NAL investors will receive 0.86 of a Pengrowth common share for each share they hold. That will give them 26% of the combined company. The deal should close by May 31, 2012.
Adding NAL’s properties in Alberta and B.C. (54% natural gas and 46% oil) will increase Pengrowth’s projected 2012 production by about 16%, to between 86,000 and 89,000 barrels of oil equivalent a day.
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BANK OF NOVA SCOTIA $55 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.1 billion; Market cap: $60.5 billion; Price-to-sales ratio: 2.2; Dividend yield: 4.0%; TSINetwork Rating: Above Average; www.scotiabank.com) is Canada’s third-largest bank, with assets of $637.1 billion.
During the financial crisis, the bank’s revenue fell 4.9%, from $12.5 billion in 2007 to $11.9 billion in 2008 (fiscal years end October 31). As the crisis passed, revenue rebounded by 45.6%, to $17.3 billion, in 2011.
Earnings fell 23.9%, from $4.01 a share (or a total of $4.0 billion) in 2007 to $3.05 a share (or $3.0 billion) in 2008. That’s largely because the bank’s loan-loss provisions rose as some of its clients fell behind on their payments. Writedowns of securities also contributed to the drop. However, earnings recovered to $3.31 a share (or $3.4 billion) in 2009, and reached $4.62 a share (or $5.0 billion) in 2011.
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During the financial crisis, the bank’s revenue fell 4.9%, from $12.5 billion in 2007 to $11.9 billion in 2008 (fiscal years end October 31). As the crisis passed, revenue rebounded by 45.6%, to $17.3 billion, in 2011.
Earnings fell 23.9%, from $4.01 a share (or a total of $4.0 billion) in 2007 to $3.05 a share (or $3.0 billion) in 2008. That’s largely because the bank’s loan-loss provisions rose as some of its clients fell behind on their payments. Writedowns of securities also contributed to the drop. However, earnings recovered to $3.31 a share (or $3.4 billion) in 2009, and reached $4.62 a share (or $5.0 billion) in 2011.
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TECK RESOURCES LTD. $36 (www.teck.com) plans to sell $1 billion U.S. of new long-term bonds. It will use the cash to redeem $1.05 billion U.S. of its existing debt. The company will record a one-time, non-cash charge of $340 million U.S....
TORONTO-DOMINION BANK $80 (www.tdbank.com) is looking for new ways to cut its costs, as low interest rates have shrunk the revenue the bank earns from loans. However, its credit losses continue to fall as more borrowers repay their loans on time....
ROYAL BANK OF CANADA $56 (www.rbc.com) has completed the sale of its struggling U.S. retail-banking business, which consists of 424 branches in six southeastern states. That will free up cash that the bank can invest in its more profitable banking operations in Canada and the Caribbean....
LOBLAW COMPANIES LTD. $35 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 281.4 million; Market cap: $9.8 billion; Price-to-sales ratio: 0.3; Dividend yield: 2.4%; TSINetwork Rating: Above Average; www.loblaw.ca) is Canada’s largest food retailer. George Weston Ltd. (Toronto symbol WN) owns 64% of the company’s shares.
Loblaw continues to make progress with its multi-year plan to streamline its supply chain and avoid product shortages. These actions mainly included closing 11 distribution centres and opening eight new ones, and installing new computer systems. The company claims that about 99% of its products are now in stock at its 1,000 supermarkets across Canada.
Loblaw continues to make progress with its multi-year plan to streamline its supply chain and avoid product shortages. These actions mainly included closing 11 distribution centres and opening eight new ones, and installing new computer systems. The company claims that about 99% of its products are now in stock at its 1,000 supermarkets across Canada.