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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ROYAL BANK OF CANADA $53 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.4 billion; Market cap: $74.2 billion; Price-to-sales ratio: 2.1; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.rbc.com) is Canada’s largest bank, with total assets of $726.2 billion. In its 2010 fiscal year, which ended October 31, 2010, Royal earned $5.2 billion, or $3.46 a share. That’s up 35.4% from $3.9 billion, or $2.57 a share, in fiscal 2009. The fiscal 2010 earnings figure includes a $116-million loss on the sale of one of the bank’s main holdings, U.S.-based Liberty Life Insurance Co. Without unusual items, such as the loss on Liberty Life, Royal would have earned $5.3 billion, up 9.9% from $4.9 billion a year earlier....
Ottawa’s new tax on income trusts came into effect nine days ago, on January 1, 2011. The new tax puts income trusts on an equal footing with regular corporations. Some income trusts converted to conventional corporations before the new tax came into effect, or plan to do so in the coming months. Others will continue to operate as trusts. (In light of the new tax, we’ve analyzed some trusts that may be appropriate for income-seeking investors in a just-published issue of Canadian Wealth Advisor, our newsletter for conservative investing. One of these trusts has made a number of big investments in wind power. Read on for further details.)...
Demand for wireless services is rising sharply in North America. That’s partly because device makers continue to release new cellphones and wireless devices, such as Apple’s iPad and Amazon’s Kindle e-book reader. As well, more customers are switching from traditional phones (or land lines) to wireless services. Smartphones, in particular, have become increasingly popular. Aside from functioning as mobile phones, these devices have many computer-like functions, including Internet access and email. Apple’s iPhone and Research in Motion’s Blackberry are today’s top-selling smartphones. However, other firms, such as Motorola and Samsung, have introduced new smartphones in recent months, as well....
We’ve long recommended that all Canadian investors own two or more of the big five Canadian bank stocks. That’s mainly because of their importance to Canada’s economy. The top five banks slumped deeply during the 2007-2009 market downturn, like most stocks. But since the market turnaround of March 2009, several of the top five have recovered and gone on (at least briefly) to all-time highs. Few other stock groups have done as well. (In the latest issue of Canadian Wealth Advisor, our newsletter for conservative investing, we update our buy/sell/hold advice on Bank of Nova Scotia, which is the third biggest of the big-five banks. Read on for further details.)...
FORTIS INC. $32 (Toronto symbol FTS; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 173.7 million; Market cap: $5.6 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.5%; TSINetwork Rating: Above Average; www.fortis.ca) 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. Fortis’ other businesses include Terasen Inc., which distributes natural gas in B.C., and hotels in Atlantic Canada. Fortis earned $45 million in the three months ended September 30, 2010. That’s up 25.0% from $36 million a year earlier. Earnings per share rose 23.8%, to $0.26 from $0.21, on more shares outstanding. Earnings rose at the company’s power businesses. That helped offset a $5 million loss at Terasen, which makes most of its money in the winter, when customers need gas to heat their homes. Revenue rose 8.3%, to $720 million from $665 million. The company will spend $6.6 on capital upgrades over the next six years, including $1.1 billion in 2010. One of its projects is a new hydroelectric plant near the Waneta Dam south of Trail, B.C. Fortis will own 51% of this new facility, and the B.C. government will own the remaining 49%. BC Hydro, the provincial power authority, will buy most of the power from this plant when it begins operating in 2015. That cuts the risk of this investment....
CAE INC. $12 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 256.6 million; Market cap: $3.1 billion; Price-to-sales ratio: 2.0; Dividend yield: 1.3%; TSINetwork Rating: Average; www.cae.com) makes military and airline flight simulators. It also runs commercial and military pilot-training schools in over 20 countries. In its second quarter, which ended September 30, 2010, CAE’s earnings rose 0.3%, to $40.0 million from $39.9 million a year earlier. Earnings per share were unchanged at $0.16. Revenue rose 6.1%, to $386.6 million from $364.5 million. Revenue from civilian clients rose 8%. CAE sold 16 flight simulators in the first half of fiscal 2011, and expects to sell around 25 for the full year. Revenue from military clients rose 4%....
TRANSALTA CORP. $21 (Toronto symbol TA; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 220.3 million; Market cap: $4.6 billion; Price-to-sales ratio: 1.6; Dividend yield: 5.5%; TSINetwork Rating: Average; www.transalta.com) operates over 85 unregulated power plants in Canada, the U.S. and Australia. Coal-fired plants generate 53% of TransAlta’s power. Natural gas accounts for 25%, and the remaining 22% comes from hydroelectric and renewable sources. Lower power prices in Alberta and the northwestern U.S. continue to weigh on TransAlta’s earnings. In the three months ended September 30, 2010, earnings fell 42.4%, to $38 million from $66 million a year earlier. Earnings per share fell 50.0%, to $0.17 from $0.34, on more shares outstanding. However, cash flow per share rose 7.1%, to $1.05 from $0.98. As well, revenue rose 5.1%, to $700 million from $666 million. These increases mainly came from the 21 power plants that TransAlta gained following its 2009 purchase of Canadian Hydro Developers Inc. The new plants also pushed up production by 9.8% in the latest quarter. As well, TransAlta’s plants operated at 91.0% of capacity, up from 83.9% a year earlier....
BOMBARDIER INC. (Toronto symbols BBD.A $4.97 and BBD.B $4.98; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $8.5 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.0%; TSINetwork Rating: Average; www.bombardier.com) is the world’s third-largest commercial-aircraft maker, behind Boeing and Airbus. Its aerospace division supplies roughly half of its revenue. The other half comes from its transportation division, which is the world’s largest maker of passenger railcars. In its 2011 second quarter, which ended July 31, 2010, the company earned $0.08 a share (all amounts except share prices and market cap in U.S. dollars). That’s down 27.2% from $0.11 a share, a year earlier. Revenue fell 17.5%, to $4.1 billion from $4.9 billion. The uncertain economy continues to hurt demand for Bombardier’s jets. It delivered 46 aircraft in the latest quarter. That’s down from 80 a year earlier. However, Bombardier received orders for 29 new planes (net of cancellations) in the latest quarter. A year ago, it had negative 38 net orders. The railcar division received $4.3 billion of new orders, up 43.3% from $3.0 billion a year earlier....
EMERA INC. $31 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 114.0 million; Market cap: $3.5 billion; Price-to-sales ratio: 2.3; Dividend yield: 4.2%; TSINetwork Rating: Average; www.emera.com) gets 70% of its revenue from Nova Scotia Power Inc., which is Nova Scotia’s main electrical-power supplier. The rest comes from its investments in pipelines and power companies in the U.S. and Caribbean. Emera is expanding into other businesses and countries. For example, it recently paid $85 million U.S. for 38% of Barbados Light & Power Co. Ltd. As well, its $350-million Brunswick Pipeline, which pumps natural gas from Saint John, New Brunswick, to the U.S. border, began operating on July 16, 2009. Thanks to these new operations and a lower tax bill, Emera’s earnings rose 20.1%, to $44.8 million from $37.3 million a year earlier. Earnings per share rose 18.2%, to $0.39 from $0.33, on more shares outstanding. Revenue rose 10.1%, to $373.5 million from $339.1 million....
ATCO LTD. (Toronto symbols ACO.X (class I non-voting) $57 and ACO.Y (class II voting) $57; Income Portfolio, Utilities sector; Shares outstanding: 58.1 million; Market cap: $3.3 billion; Price-to-sales ratio: 1.0; Dividend yield: 1.9%; TSINetwork Rating: Above Average; www.atco.com) is a holding company. Its main subsidiary is 52.2%-owned Canadian Utilities (see CANADIAN UTILITIES LTD. - Toronto symbols CU $50 and CU.X $50). ATCO recently grouped its businesses into three main divisions: Utilities (which distributes electricity and natural gas); Energy (which operates power plants); and Structures & Logistics (which sells services to 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 earned $1.02 a share (or a total of $59.1 million) in the three months ended September 30, 2010. That’s up 10.9% from $0.92 a share (or $53.3 million) a year earlier. These figures exclude one-time items, such as losses on hedging contracts. Regulators let ATCO’s utilities businesses increase their rates. As well, rising oil and mineral prices have prompted mining and energy firms to increase exploration. That has lifted earnings at ATCO’s structures business. Revenue rose 11.2%, to $761.1 million from $684.3 million....