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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MOLSON COORS CANADA INC. (Toronto symbols TPX.A $41 and TPX.B $42; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 181.1 million; Market cap: $7.4 billion; Price-to-sales ratio: 2.1; Dividend yield: 3.1%; TSINetwork Rating: Average; www.molsoncoors.com) reports that its sales rose 9.1% in the three months ended September 24, 2011, to $954.4 million from $875.0 million a year earlier (all amounts except share prices and market cap in U.S. dollars). That’s mainly due to favourable foreign currency rates and higher beer sales overseas.
However, higher ingredient prices and lower sales in North America and the U.K. cut earnings by 11.2%, to $212.4 million, or $1.14 a share, from $239.1 million, or $1.28 a share.
The company continues to cut its costs as a result of MillerCoors, its joint venture in the U.S. with rival brewer SABMiller. Combined with savings from its own plan, Molson Coors cut its expenses by $29 million in the latest quarter.
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However, higher ingredient prices and lower sales in North America and the U.K. cut earnings by 11.2%, to $212.4 million, or $1.14 a share, from $239.1 million, or $1.28 a share.
The company continues to cut its costs as a result of MillerCoors, its joint venture in the U.S. with rival brewer SABMiller. Combined with savings from its own plan, Molson Coors cut its expenses by $29 million in the latest quarter.
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SAPUTO INC. $39 (Toronto symbol SAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 200.6 million; Market cap: $7.8 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.9%; TSINetwork Rating: Average; www.saputo.com) earned $127.1 million in its 2012 second quarter, which ended September 30, 2011. That’s up 1.0% from $125.8 million a year earlier. Earnings per share rose 1.7%, to $0.61 from $0.60, on fewer shares outstanding.
Sales rose 15.5%, to $1.8 billion from $1.55 billion. That mainly reflects the contribution of DCI Cheese Co. Inc., which Saputo bought for $270.5 million in March 2011. DCI distributes specialty cheeses in the U.S. However, Saputo’s Canadian sales volumes are falling. As well, new regulations will force the company to use more full-fat milk in its Canadian cheese products instead of milk solids. That will increase its costs.
Saputo is a hold.
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Sales rose 15.5%, to $1.8 billion from $1.55 billion. That mainly reflects the contribution of DCI Cheese Co. Inc., which Saputo bought for $270.5 million in March 2011. DCI distributes specialty cheeses in the U.S. However, Saputo’s Canadian sales volumes are falling. As well, new regulations will force the company to use more full-fat milk in its Canadian cheese products instead of milk solids. That will increase its costs.
Saputo is a hold.
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LINAMAR CORP. $15 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.7 million; Market cap: $970.5 million; Price-to-sales ratio: 0.4; Dividend yield: 2.1%; TSINetwork Rating: Extra Risk; www.linamar.com) makes transmission and driveline systems for carmakers in North America, Europe and Asia. Its other products include engines and self-propelled, scissor-type elevating work platforms, which it sells under the Skyjack name.
The company continues to benefit from the recovery of the global auto industry. Linamar also bought three plants in France for $30.1 million in February 2011. These plants supply cylinder heads, gears and other parts to French carmakers Renault and Peugeot.
In the three months ended September 30, 2011, Linamar’s sales rose 30.4%, to $725.6 million from $556.3 million a year earlier. Sales at the powertrain/ driveline division (which accounted for 88% of overall sales) rose 38.6%. Sales at the industrial products division (12% of sales) jumped 123.3%.
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The company continues to benefit from the recovery of the global auto industry. Linamar also bought three plants in France for $30.1 million in February 2011. These plants supply cylinder heads, gears and other parts to French carmakers Renault and Peugeot.
In the three months ended September 30, 2011, Linamar’s sales rose 30.4%, to $725.6 million from $556.3 million a year earlier. Sales at the powertrain/ driveline division (which accounted for 88% of overall sales) rose 38.6%. Sales at the industrial products division (12% of sales) jumped 123.3%.
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SHAWCOR LTD. $29 (Toronto symbol SCL.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 70.6 million; Market cap: $2.0 billion; Price-to-sales ratio: 1.9; Dividend yield: 1.1%; TSINetwork Rating: Average; www.shawcor.com) makes sealants and coatings that protect oil and natural gas pipelines from corrosion. It also makes industrial equipment, such as electrical wire and protective sheaths.
The company’s expertise and strong reputation are helping it win new contracts. For example, it recently won a $400-million U.S. deal to provide coatings and other services to a natural gas pipeline in the Ichthys gas field off the northern coast of Australia.
The company will also provide coatings for a 300-kilometre pipeline that pumps natural gas from fields off the coast of western Australia to the Wheatstone liquefied natural gas facility. This contract is worth $170 million U.S. In addition, Shaw- Cor recently announced a $45 million U.S. deal to coat a pipeline in the Arabian Gulf.
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The company’s expertise and strong reputation are helping it win new contracts. For example, it recently won a $400-million U.S. deal to provide coatings and other services to a natural gas pipeline in the Ichthys gas field off the northern coast of Australia.
The company will also provide coatings for a 300-kilometre pipeline that pumps natural gas from fields off the coast of western Australia to the Wheatstone liquefied natural gas facility. This contract is worth $170 million U.S. In addition, Shaw- Cor recently announced a $45 million U.S. deal to coat a pipeline in the Arabian Gulf.
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FINNING INTERNATIONAL INC. $24 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 171.6 million; Market cap: $4.1 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.finning.com) sells, rents and repairs tractors, bulldozers, trucks and other heavy equipment made by Caterpillar Inc. Finning’s major customers are mainly in the western Canadian mining, forest products and construction industries. The company also operates in the U.K. and South America.
Finning has been installing a new computer system that will make its Canadian operations more efficient. However, it has had difficulty implementing this new system. That has delayed parts shipments to its customers.
As a result of these problems and a five-week strike at the company’s B.C. operations, earnings fell 44.1% in the three months ended September 30, 2011, to $35.4 million, or $0.21 a share. A year earlier, it earned $63.4 million, or $0.37 a share. However, revenue rose 10.2%, to $1.3 billion from $1.2 billion. Demand for new equipment was strong, especially from mining companies.
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Finning has been installing a new computer system that will make its Canadian operations more efficient. However, it has had difficulty implementing this new system. That has delayed parts shipments to its customers.
As a result of these problems and a five-week strike at the company’s B.C. operations, earnings fell 44.1% in the three months ended September 30, 2011, to $35.4 million, or $0.21 a share. A year earlier, it earned $63.4 million, or $0.37 a share. However, revenue rose 10.2%, to $1.3 billion from $1.2 billion. Demand for new equipment was strong, especially from mining companies.
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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....