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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SNC-LAVALIN GROUP INC. $50 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 150.8 million; Market cap: $7.5 billion; Price-to-sales ratio: 1.1; Dividend yield: 1.7%; TSINetwork Rating: Average; www.snclavalin.com) is a leading Canadian engineering and construction company. It specializes in large-scale public-works projects, such as roads, bridges, transit systems and water-treatment plants.
SNC recently bought the 23.08% of AltaLink L.P. that it did not already own. The company now owns 100% of AltaLink, which provides electricity to 85% of Alberta’s population through 12,000 kilometres of power lines and 270 substations.
AltaLink’s long-term outlook is bright, partly because new power lines will have to be built to power Alberta’s expanding oil sands projects. In addition, AltaLink’s expertise should help the company compete for new power-infrastructure projects in other provinces.
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SNC recently bought the 23.08% of AltaLink L.P. that it did not already own. The company now owns 100% of AltaLink, which provides electricity to 85% of Alberta’s population through 12,000 kilometres of power lines and 270 substations.
AltaLink’s long-term outlook is bright, partly because new power lines will have to be built to power Alberta’s expanding oil sands projects. In addition, AltaLink’s expertise should help the company compete for new power-infrastructure projects in other provinces.
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BANK OF NOVA SCOTIA $49 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.1 billion; Market cap: $53.9 billion; Price-to-sales ratio: 2.0; Dividend yield: 4.2%; TSINetwork Rating: Above Average; www.scotiabank.com) remains our top pick among Canada’s big five banks. That’s mainly because it continues to expand in fast-growing regions like Latin America, South America and Asia. Its international banking division accounts for 26% of its earnings.
In the year ended October 31, 2011, the bank earned $5.3 billion. That’s up 21.4% from $4.3 billion in 2010. Earnings per share rose 18.2%, to $4.62 from $3.91, on more shares outstanding. Revenue rose 11.5%, to a record $17.3 billion from $15.5 billion. Strong gains at its international and wealth-management operations offset slower growth at its Canadian banking and securities-trading divisions.
Earnings in 2012 should rise to $4.82 a share. The stock trades at just 10.2 times that figure. The $2.08 dividend yields 4.2%. The bank paid out 44% of its earnings as dividends in fiscal 2011, which was within its target of 40% to 50%. That gives it room to raise the dividend in fiscal 2012.
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In the year ended October 31, 2011, the bank earned $5.3 billion. That’s up 21.4% from $4.3 billion in 2010. Earnings per share rose 18.2%, to $4.62 from $3.91, on more shares outstanding. Revenue rose 11.5%, to a record $17.3 billion from $15.5 billion. Strong gains at its international and wealth-management operations offset slower growth at its Canadian banking and securities-trading divisions.
Earnings in 2012 should rise to $4.82 a share. The stock trades at just 10.2 times that figure. The $2.08 dividend yields 4.2%. The bank paid out 44% of its earnings as dividends in fiscal 2011, which was within its target of 40% to 50%. That gives it room to raise the dividend in fiscal 2012.
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ATCO LTD. (Toronto symbols ACO.X [class I non-voting] $61 and ACO.Y [class II voting] $60; Income Portfolio, Utilities sector; Shares outstanding: 58.2 million; Market cap: $3.4 billion; Price-to-sales ratio: 0.9; Dividend yield: 1.9%; TSINetwork Rating: Above Average; www.atco.com) is a holding company. Its main subsidiary is 52.7%-owned Canadian Utilities (see page 1).
ATCO has four main divisions: Utilities (which distributes electricity and natural gas); Energy (which operates power plants); its Australian business (which operates power plants and distributes natural gas in Australia); and Structures & Logistics (which serves construction companies and firms that explore for oil and natural gas). ATCO owns 75.5% of the Structures & Logistics division; Canadian Utilities owns the remaining 24.5%.
The company also owns several smaller businesses. For example, ATCO I-Tek manages computer networks, billing and payment processing for a wide variety of businesses. Another subsidiary, ASHCOR Technologies Ltd., makes fly ash from the residue from ATCO’s coal-fired power plants. Adding fly ash to cement makes it more durable.
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ATCO has four main divisions: Utilities (which distributes electricity and natural gas); Energy (which operates power plants); its Australian business (which operates power plants and distributes natural gas in Australia); and Structures & Logistics (which serves construction companies and firms that explore for oil and natural gas). ATCO owns 75.5% of the Structures & Logistics division; Canadian Utilities owns the remaining 24.5%.
The company also owns several smaller businesses. For example, ATCO I-Tek manages computer networks, billing and payment processing for a wide variety of businesses. Another subsidiary, ASHCOR Technologies Ltd., makes fly ash from the residue from ATCO’s coal-fired power plants. Adding fly ash to cement makes it more durable.
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CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $60 and CU.X [class B voting] $61; Income Portfolio, Utilities sector; Shares outstanding: 127.6 million; Market cap: $7.7 billion; Price-to-sales ratio: 2.6; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.canadianutilities.com) distributes electricity and natural gas in Alberta. It also operates 19 power plants in Canada, Australia and the U.K. ATCO Ltd. (see page 2) owns 52.7% of the company.
Canadian Utilities’ revenue fell 1.0%, from $2.43 billion in 2006 to $2.40 billion in 2007, but rose 15.6%, to $2.8 billion, in 2008. Lower power rates in Alberta cut revenue by 7.0%, to $2.6 billion, in 2009. However, revenue rose 2.8% in 2010, to $2.7 billion, because the company started up a new power plant in Australia. Earnings rose 37.6%, from $320.5 million, or $2.54 a share, in 2006 to $440.9 million, or $3.50 a share, in 2010.
Canadian Utilities continues to expand in Australia. In July 2011, it paid $1.1 billion for Western Australia Gas Networks, which distributes natural gas to over 620,000 customers in the city of Perth. The company’s Australian operations now supply 8% of its revenue and 10% of its earnings.
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Canadian Utilities’ revenue fell 1.0%, from $2.43 billion in 2006 to $2.40 billion in 2007, but rose 15.6%, to $2.8 billion, in 2008. Lower power rates in Alberta cut revenue by 7.0%, to $2.6 billion, in 2009. However, revenue rose 2.8% in 2010, to $2.7 billion, because the company started up a new power plant in Australia. Earnings rose 37.6%, from $320.5 million, or $2.54 a share, in 2006 to $440.9 million, or $3.50 a share, in 2010.
Canadian Utilities continues to expand in Australia. In July 2011, it paid $1.1 billion for Western Australia Gas Networks, which distributes natural gas to over 620,000 customers in the city of Perth. The company’s Australian operations now supply 8% of its revenue and 10% of its earnings.
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Dividend reinvestment plans, or DRIPs, are plans some companies offer to allow shareholders to receive additional shares in lieu of cash dividends. DRIPs bypass brokers, so shareholders save on commissions. DRIPs also eliminate the nuisance effect of receiving small cash dividend payments. Second, some DRIPs let you reinvest your dividends in additional shares at a 5% discount to current prices. Third, many DRIPs also allow optional commission-free share purchases on a monthly or quarterly basis. Generally, investors must first own and register at least one share before they can participate in a DRIP. Registration will generally cost $40-$50 per company. The investor must then notify the company that he or she wishes to participate in the company’s DRIP....
CAE INC. $9.67 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 257.2 million; Market cap: $2.5 billion; Price-to-sales ratio: 1.5; Dividend yield: 1.7%; TSINetwork Rating: Average; www.cae.com) makes military and airline flight simulators. It also runs pilot-training schools. CAE continues to apply its simulator expertise to new fields, such as medical training. It recently bought Florida-based Medical Education Technologies, Inc. (METI), which makes medical simulators and other products, including life-like mannequins, for training paramedics and medical students. Since 1996, METI has sold about 6,000 simulators to medical schools in 40 countries. This purchase will add $60 million U.S. to CAE’s annual revenue of $1.6 billion (Canadian)....
BOMBARDIER INC. (Toronto symbols BBD.A $4.10 and BBD.B $4.01; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $6.8 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.4%; TSINetwork Rating: Average; www.bombardier.com) is the world’s third-largest commercial-aircraft maker, behind Boeing and Airbus. It is also the world’s largest passenger railcar manufacturer. In the three months ended July 31, 2011, Bombardier’s earnings rose 56.7%, to $210 million, or $0.12 a share (all amounts except share prices and market cap in U.S. dollars). A year earlier, it earned $134 million, or $0.07 a share. Sales rose 17.4% to $4.7 billion from $4.0 billion. Sales at the railcar division (which supplies 56% of Bombardier’s total sales) rose 26.0%, mainly due to strong demand from European public-transit systems. In the latest quarter, this business received $3.9 billion of new orders, down from $4.3 billion a year earlier. Its order backlog is $33.9 billion, up from $33.5 billion on January 31, 2011....
TORSTAR CORP. $8.97 (Toronto symbol TS.B; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 79.5 million; Market cap: $713.1 million; Price-to-sales ratio: 0.5; Dividend yield: 5.6%; TSINetwork Rating: Above Average; www.torstar.com) publishes The Toronto Star, which is Canada’s largest daily newspaper by circulation. The company also publishes three other daily newspapers and over 100 weeklies, mainly in southern Ontario. Torstar’s newspaper business accounts for about 70% of its revenue and 60% of its earnings. The company’s other main business is wholly owned Harlequin Enterprises Ltd., the world’s leading publisher of romance novels. Torstar recently received $291.6 million from the sale of its 20% stake in CTVglobemedia to BCE Inc. (Toronto symbol BCE). CTVglobemedia owns CTV Television and other broadcasting businesses....
TRANSCONTINENTAL INC. $12 (Toronto symbol TCL.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 81.0 million; Market cap: $972.0 million; Price-to-sales ratio: 0.5; Dividend yield: 4.5%; TSINetwork Rating: Average; www.transcontinental.com) is the largest commercial printer in Canada, and the fourth-largest in North America. Its printing operations provide two-thirds of its revenue. The remaining third comes from publishing over 170 newspapers and magazines. The publishing division also has over 1,000 web sites, which will become more important to Transcontinental’s growth in the next few years as advertisers spend more on the Internet than print products. In the quarter ended July 31, 2011, the company’s revenue rose 2.3%, to $492.6 million from $481.3 million a year earlier. It has won a number of new printing contracts, including an expanded deal to print The Globe and Mail....
THOMSON REUTERS CORP. $29 (Toronto symbol TRI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 836.8 million; Market cap: $24.3 billion; Price-to-sales ratio: 1.7; Dividend yield: 4.5%; TSINetwork Rating: Above Average; www.thomsonreuters.com) has two main divisions: Markets (which supplied 57% of Thomson Reuters’ 2010 revenue and 48% of its earnings), sells news and information products to banks and other financial institutions. Professional (43%, 52%) sells information to professionals in the legal, taxation, accounting and scientific research fields. Thomson Reuters recently said it plans to sell its healthcare business, which sells data and software that helps hospitals, clinics and health-care professionals cut costs and reduce fraud. In 2010, this division accounted for $450 million, or 3%, of the company’s revenue of $13.1 billion (all amounts except share price and market cap in U.S. dollars). Thomson Reuters may use proceeds from the sale to make more acquisitions, particularly in developing markets, where demand for reliable information is growing quickly....