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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A key part of our three-part tsinetwork.ca investment strategy is to diversify by spreading your money out across the five main economic sectors (Manufacturing & Industry; Resources; Consumer; Finance; and Utilities). (The other two parts are to stick with well-established, dividend-paying companies, and downplay stocks in the broker/public-relations limelight.) Generally speaking, stocks in the Resources and Manufacturing & Industry sectors expose you to above-average volatility, and stocks in the Utilities and Canadian Finance sectors entail below-average volatility. Consumer stocks fall somewhere in the middle....
Telus Corp., symbol T.A on Toronto, provides telephone services in B.C., Alberta and eastern Quebec. It also sells wireless services across Canada. In 2010, the dividend paying stock’s sales rose 1.8%, to $9.8 billion from $9.6 billion in 2009. Sales in the company’s wireless division rose 6.6%, and the wireline division’s sales fell 2.2%. Overall, Telus added 378,000 customers in 2010, bringing the total to 12.3 million. That figure includes 7.0 million wireless subscribers, 3.7 million wireline access lines, 1.2 million Internet subscribers and 314,000 “Optik TV” customers. (Optik TV is an Internet-based television service that operates through phone lines.)...
Fortis Inc., symbol FTS on Toronto, is the main supplier of electrical power in Newfoundland and Prince Edward Island. It also operates power plants in other parts of Canada, as well as the U.S., Belize and the Cayman Islands. As well, Fortis operates hotels and other businesses in Canada. Fortis recently raised its quarterly dividend by 3.6%, to $0.29 a share from $0.28. The new annual rate of $1.16 yields 3.5%. The company has been working to lower its reliance on Atlantic Canada. In May 2004, Fortis bought regulated electrical utilities in Alberta and B.C. for $1.5 billion in cash and stock. In May 2007, it paid $3.7 billion for the regulated gas-distribution business of Terasen Inc. (formerly called BC Gas), which has 939,600 customers in B.C. Fortis issued $1.15 billion of new common shares to help pay for this purchase....
Blue chip stocks in Canada’s telephone industry continue to face rising competition. Along with wireless and cable companies, Internet-based phone services, such as Skype, continue to gain popularity. As well, three new wireless providers (Globalive’s WIND Mobile, Mobilicity and Public Mobile) entered the Canadian market in 2010. More new wireless firms are likely to follow. This rising competition will continue to put pressure on BCE Inc. (symbol BCE on Toronto), Canada’s largest telephone-service provider. In light of this and other developments surrounding the stock, we’ve updated our buy/sell/hold advice on BCE in the latest Canadian Wealth Advisor, our newsletter for safety-conscious conservative investing....
When we’re picking stocks to recommend in our newsletters, including Wall Street Stock Forecaster, our publication for conservative investing in U.S. stocks, we like to see companies that benefit from steady revenue streams from high-quality assets, long-term contracts or other reliable sources. That’s because this type of revenue helps cut a stock’s risk. It also cuts its exposure to the ups and downs of the economic cycle.
Conservative investing: Shift toward services has helped this former “Stock of the Year”
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Investors are paying more attention to dividend yields (a company’s total annual dividends paid per share divided by the current stock price) as stock markets continue to recover. Companies are responding by doing their best to maintain, or even increase, their dividend payments. That’s good news for investors, because dividends are more dependable than capital gains as a source of income. A couple of decades ago, you could assume that dividends would contribute up to a third of your long-term investment returns, without even considering the tax-cutting effects of the dividend tax credit. Earlier in this decade, dividend yields were generally too low to provide a third of investment returns. But now that yields have moved up and interest rates have moved down, it’s realistic to assume they will once again contribute as much as a third of your total return....
CANADIAN IMPERIAL BANK OF COMMERCE $77 (Toronto symbol CM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 392.7 million; Market cap: $30.2 billion; Price-to-sales ratio: 2.0; Dividend yield: 4.5%; TSINetwork Rating: Above Average; www.cibc.com) is Canada’s fifth-largest bank, with total assets of $352.0 billion. CIBC continues to expand its main retail-banking business, which is less volatile than its trading activities. Retail banking now accounts for 74% of CIBC’s business, up from 69% a year earlier. The bank aims to raise this to 75%. This focus on retail banking is paying off. In fiscal 2010, CIBC’s earnings jumped 125.6%, to $2.3 billion. It earned $1.0 billion in fiscal 2009. Earnings per share rose 121.5%, to $5.87 from $2.65, on more shares outstanding. If you exclude several one-time items, including writedowns of securities the bank holds, earnings per share would have risen 9.8%, to $6.37 from $5.80....
BANK OF MONTREAL $58 (Toronto symbol BMO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 568.1 million; Market cap: $32.9 billion; Price-to-sales ratio: 2.1; Dividend yield: 4.8%; TSINetwork Rating: Above Average; www.bmo.com) is Canada’s fourth-largest bank, with assets of $411.6 billion. The bank earned $2.8 billion in its 2010 fiscal year. That’s up 57.2% from $1.8 billion in fiscal 2009. Earnings per share rose 54.2%, to $4.75 from $3.08, on more shares outstanding. Unusual items, such as severance costs and writedowns of securities the bank holds, depressed its fiscal 2009 earnings. If you exclude these items, earnings per share would have risen 19.9%. In fiscal 2010, loan-loss provisions fell 34.6%, to $1.05 billion from $1.6 billion. Revenue rose 10.4%, to $12.2 billion from $11.1 billion....
BANK OF NOVA SCOTIA $56 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.0 billion; Market cap: $56.0 billion; Price-to-sales ratio: 2.5; Dividend yield: 3.5%; TSINetwork Rating: Above Average; www.scotiabank.com) is Canada’s third-largest bank, with assets of $526.7 billion. The bank recently agreed to buy the 82% of DundeeWealth Inc. (Toronto symbol DW) that it does not already own. Dundee- Wealth manages investments and operates a brokerage. The company also owns the Dynamic family of mutual funds, and provides financialplanning and investment advice. The deal will double the size of Bank of Nova Scotia’s mutualfund business, and make it Canada’s fifth-largest mutual-fund company. Bank of Nova Scotia will pay $2.3 billion in cash and stock for the rest of DundeeWealth. If Dundee- Wealth shareholders approve, the sale should close in the first half of 2011. The new operations should add $0.12 a share to the bank’s annual earnings in the third year following the purchase....
TORONTO-DOMINION BANK $74 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; Shares outstanding: 878.5 million; Market cap: $65.0 billion; Price-to-sales ratio: 2.6; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.td.com) is Canada’s second-largest bank, with total assets of $619.5 billion. TD recently agreed to buy privately held Chrysler Financial, which provides car loans and leases to buyers of Chrysler vehicles in Canada and the U.S. The purchase will make TD one of the top five car-loan providers in North America. The bank will pay $6.3 billion U.S. for Chrysler Financial when the deal closes in April 2011. This purchase will let TD profit from rising new-car demand. It will also add $100 million to TD’s annual earnings, starting in fiscal 2012....