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.
[text_ad use_category="243"]
Read More
Close
We continue to recommend that you cut your investment risk by spreading your money out across the five main economic sectors (Manufacturing & Industry; Resources; Consumer; Finance; and Utilities). Most investors should have investments in most, if not all, of these five sectors. The proper proportions depend on your circumstances and temperament. If you’re an income-seeking or conservative investor, you may want to place more emphasis on Utilities. That’s because these firms’ operations (such as power plants and pipelines) generate steady cash flows. That cuts their risk, and gives them plenty of flexibility to invest in new-growth projects. It’s also why utilities are among the best Canadian dividend stocks. In a just-published issue of Canadian Wealth Advisor, our newsletter for conservative investing, we update our buy/sell/hold advice on a utility that’s investing heavily in new-growth projects: TransCanada Corp. (symbol TRP on Toronto). We’ve covered TransCanada for many years in Canadian Wealth Advisor and our flagship publication, The Successful Investor....
Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific advice on successful investing. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Today’s tip: “Dividends can produce a large part of your total return over long periods.” Dividends rarely get the respect they deserve, especially from beginning investors. That’s because a dividend paying stock’s yearly 2% or 3% or 5% dividend barely seems worth mentioning alongside possible yearly capital gains of 10%, 20% or 30% or more....
SHAWCOR LTD. $27 (Toronto symbol SCL.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 70.6 million; Market cap: $1.9 billion; Price-to-sales ratio: 1.9; Dividend yield: 1.1%; SI Rating: Average) gets 90% of its revenue by making sealants and coatings that protect oil and natural-gas pipelines from corrosion. The remaining 10% comes from making electrical wire and protective sheaths. In the three months ended June 30, 2010, ShawCor’s revenue fell 25.0%, to $234.5 million from $312.8 million a year earlier. That’s mainly because of a drop in new pipeline construction in North America. ShawCor also completed a major contract in the Caribbean in late 2009. As well, Canada accounts for just 25% of ShawCor’s revenue, so the higher Canadian dollar hurts the contribution of its overseas operations. The lower revenue was the main reason why ShawCor’s earnings fell 68.6% in the quarter, to $10.9 million, or $0.15 a share. It earned $34.6 million, or $0.49 a share, a year earlier....
FINNING INTERNATIONAL INC. $22 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 171.0 million; Market cap: $3.8 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.2%; SI Rating: Above Average) sells, rents and repairs heavy equipment, such as tractors, bulldozers and trucks, made by Caterpillar Inc. Finning’s major customers are in the mining, forest-products and construction industries in western Canada, the U.K. and South America. In the three months ended June 30, 2010, Finning earned $36.0 million, or $0.21 a share. That’s down 36.3%, from $56.5 million, or $0.33 a share, a year earlier. However, the latest quarterly earnings included a $0.06-a-share charge for costs to install a new computer system and buy back notes. Without these charges, Finning would have earned $0.27 a share in the latest quarter. Revenue fell 2.0%, to $1.07 billion from $1.1 billion. Lower sales of new and used equipment offset a 10% rise in sales of support services. Finning now gets nearly half of its revenue from services. That cuts its risk....
In the latest issue of The Successful Investor, we’ve updated our buy/sell/hold advice on grocery retailer Metro Inc. (symbol MRU.A on Toronto).
Metro is a good example of a stock that has graduated from Stock Pickers Digest, our newsletter for aggressive investors, to The Successful Investor, which focuses on more conservative selections.
...
Metro: An aggressive pick that matured into a stock more suitable for conservative investing
...
CENOVUS ENERGY INC. $29 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 751.8 million; Market cap: $21.8 billion; Price-to-sales ratio: 1.7; Dividend yield: 2.8%; SI Rating: Extra Risk) operates three oil-sands properties in Alberta, and one in Saskatchewan. Cenovus ships the heavy bitumen from these projects to refineries in Illinois and Texas. ConocoPhillips (New York symbol COP) owns 50% of these refineries, as well as 50% of Cenovus’ two main oil-sands projects. Cenovus also owns conventional oil and natural-gas properties. Cenovus’ proved oil and gas reserves will last 14.7 years. These large reserves mean that Cenovus does not need to spend heavily on exploration. That cuts its risk. Moreover, its steam-assisted gravity draining drilling technology should spur its long-term earnings. That’s because this process makes it easier to extract more heavy oil.
...
Focus on proven properties cuts risk
ENCANA CORP. $30 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 736.2 million; Market cap: $22.1 billion; Price-to-sales ratio: 1.8; Dividend yield: 2.8%; SI Rating: Average) is one of North America’s largest natural-gas producers. The company prefers to focus on large unconventional reserves, including shale gas, which is natural gas that is trapped in rock formations. To extract it, companies must pump water and chemicals into the rock. This fractures the rock and releases the natural gas. At current production rates, Encana’s proved reserves should last 12 years. However, these properties could last 50 years if you include harder-to-reach reserves. Despite weak gas prices, Encana plans to double its gas production over the next five years. That would help raise its market share, because low gas prices have prompted many of its competitors to cut production....
Regardless of whether you follow an aggressive or conservative investing approach, we continue to recommend that you own shares of at least two of Canada’s big-five banks — Bank of Montreal, Royal Bank, CIBC, TD Bank and Bank of Nova Scotia. However, banks shouldn’t be the extent of your Canadian financial holdings. To increase your profits and cut your risk, it is also essential to diversify your holdings within each economic sector — including Canadian finance. Other types of financial investments, such as non-bank financial companies, should also play a role in your portfolio.
...
High-quality non-bank financials could be big winners in the ongoing recovery
Ottawa’s new tax on income trusts comes into effect just over four months from now, on January 1, 2011. When it does, it will put trusts on an equal footing with regular corporations. Right now, income trusts pay out a high percentage of their cash flows to their unitholders. This lets them avoid paying corporate taxes. It also gives many of them significantly higher yields than a lot of dividend-paying common stocks. Many income trusts have already converted to conventional corporations in response to the new tax, or plan to do so later in 2010 or in early 2011. Others will continue to operate as trusts....
Apple Inc. (symbol AAPL on Nasdaq) continues to see strong sales of its iPad tablet computer: in April and May of 2010, the company sold 2 million of these devices. At this rate, Apple should sell many more iPads than the 6 million it was expected to sell in the first year. As well, Apple is now selling the iPad outside the U.S. That should further push up sales.
...