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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CANADIAN TIRE CORP. $56 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.6 million; Market cap: $4.6 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.5%; SI Rating: Above Average) sells automotive, household and sporting goods through 479 stores. These account for roughly 65% of its revenue, and 55% of its earnings. Canadian Tire owns 70% of its stores, but franchisees operate all of them. The company also owns other retail chains, including 378 Mark’s Work Wearhouse casual-clothing stores, 273 gas stations (some of which have car washes and convenience stores), and 87 PartSource auto-parts stores. Canadian Tire’s sales rose 18.2%, from $7.7 billion in 2005 to $9.1 billion in 2008. In 2009, sales fell 4.8%, to $8.7 billion. Same-store sales at the main retail division, which includes Canadian Tire and PartSource stores, fell 4.2%. Weak electronics sales offset higher sales of cleaning, kitchen and pet-care goods. As well, a lack of snow in Ontario and Quebec hurt sales of winter merchandise, such as snow shovels....
FORTIS INC. $28 (Toronto symbol FTS; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 170.7 million; Market cap: $4.8 billion; Price-to-sales ratio: 1.3; Dividend yield: 4.0%; SI Rating: Above Average) 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 Atlantic Canada. The company has been working to lower its reliance on Atlantic Canada. Much of its growth has come from the assets it bought as part of this plan. 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....
ATCO LTD. (Toronto symbols ACO.X (class I non-voting) $50 and ACO.Y (class II voting) $51; Income Portfolio, Utilities sector; Shares outstanding: 58.2 million; Market cap: $2.9 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.1%; SI Rating: Above Average) is a holding company. Its main subsidiary is 52.3%-owned Canadian Utilities. ATCO recently reorganized its operations into three main divisions: Utilities (which distributes electricity and natural gas); Energy (which operates power plants); and Structures & Logistics (which provides services to energy-exploration and construction companies). ATCO owns 75.5% of the Structures & Logistics division; Canadian Utilities owns the remaining 24.5%....
We’ve long recommended these 4 safe investing strategies in our newsletters and investment services. They can help you cut risk — and increase profits — in your stock portfolio. (Our special report, “Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada,” is full of safe investing strategies that you can easily put into practice right away. Click here to download your copy today.) 1. Look beyond a company’s share price: It’s a mistake to base your decision to buy or sell a stock on past stock-price performance alone. Rising and falling trends come in many shapes and sizes, depending on what’s going on in a company, its industry and the world....
Some U.S. bank stocks have reported improved profits lately. And many banks have repaid some or all of the loans they received under the U.S. government’s Troubled Asset Relief Program (TARP) in 2008. That frees these bank stocks from government control, and improves their long-term prospects. However, the U.S. banking sector remains highly volatile. As well, the industry could face greater regulation and higher costs if the Obama administration moves ahead with its reform plans. For example, Senate Banking Chairman Christopher Dodd recently released a bill that proposes to tax the largest bank stocks and financial institutions. The proceeds would be used to support a $50-billion U.S. fund aimed at dealing with failing banks and financial firms in the future....
Whether you’re an aggressive or conservative investor, 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). 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. Most investors should have investments in most, if not all, of these five sectors. The proper proportions depend on your circumstances and whether you’re an aggressive or a more conservative investor....
LINAMAR CORP. $18 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.7 million; Market cap: $1.2 billion; Price-to-sales ratio: 0.7; Dividend yield: 1.3%; SI Rating: Extra Risk) is Canada’s second-largest auto-parts maker after Magna International Inc. Linamar specializes in engines, transmissions and other precision-machined parts for the North American, European and Asian car and truck markets. The company has 37 plants in Canada, the U.S., Mexico, Germany, Hungary, South Korea and China. The stock fell to $2.00 in March 2009. That’s because the recession hurt new-car sales. The bankruptcies of General Motors and Chrysler — both of which are Linamar customers — also added to the company’s uncertainty. In response, Linamar aggressively cut its costs, mostly by laying off workers. That should save it $60 million annually, starting this year. The company is also diversifying into non-automotive products. It now makes parts for lawnmowers, wind turbines and drilling equipment. It also owns Skyjack, which makes self-propelled, scissor-type elevating work platforms. Linamar now gets 10% of its sales from non-automotive products....
SHAWCOR LTD. $28 (Toronto symbol SCL.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 70.5 million; Market cap: $2.0 billion; Price-to-sales ratio: 1.6; Dividend yield: 1.0%; SI Rating: Average) gets 90% of its revenue by making sealants and coatings that protect onshore and offshore oil and natural-gas pipelines from corrosion. The remaining 10% comes from making industrial equipment, such as electrical wire and protective sheaths. Lower oil and natural-gas prices have hurt demand for ShawCor’s pipeline-coating services. The weak economy also dampened demand for its industrial products. That’s why ShawCor’s 2009 revenue fell 14.2%, to $1.2 billion from $1.4 billion in 2008. Despite the lower revenue, ShawCor’s 2009 earnings fell just 2.7%, to $131.1 million from $134.7 million. Earnings per share fell 1.6%, to $1.85 from $1.88, on fewer shares outstanding. ShawCor has upgraded its plants over the past few years. That has helped cut its operating costs. Lower prices for raw materials, such as steel and plastics, have also helped its earnings....
FINNING INTERNATIONAL INC. $18 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 170.9 million; Market cap: $3.1 billion; Price-to-sales ratio: 0.7; Dividend yield: 2.4%; SI Rating: Above Average) 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. It also operates in the U.K. and South America. Many of Finning’s customers have cut or delayed spending on new equipment because of the weak global economy. In response, Finning has cut 750 of its 12,000 employees since the third quarter of 2008. The layoffs should lower the company’s annual costs by $200 million by the end of 2010. In 2009, Finning’s revenue fell 20.9%, to $4.7 billion from $6.0 billion in 2008. Earnings rose 36.3%, to $130.8 million, or $0.77 a share, from $96.0 million, or $0.55 a share. However, if you exclude severance costs and other unusual items, earnings per share fell 44.4%, to $0.85 from $1.53....
SNC-LAVALIN GROUP INC. $52 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 151.2 million; Market cap: $7.9 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.3%; SI Rating: Average) is a leading Canadian engineering and construction company. SNC designs and builds large-scale public-works projects, such as roads, bridges, transit systems and water-treatment plants. It also builds mines, chemical plants and electrical-power systems. The company gets 55% of its revenue from North America. SNC also runs plants and facilities for its clients. For example, in 2009 the company received a 29-year contract from the Province of Quebec to build and operate a new concert hall for the Montreal Symphony Orchestra. The new hall should open in mid-2011. Steady revenue streams from deals like this help cut SNC’s risk. The company now gets 30% of its revenue from services. In 2009, SNC’s revenue fell 14.1%, to $6.1 billion from $7.1 billion in 2008. That’s mainly because the recession prompted many of SNC’s clients in the mining, electrical-power and chemical industries to put off investing in new plants. However, SNC’s 2009 earnings rose 15.1%, to $2.36 a share (or a total of $359.4 million) from $2.05 a share (or $312.5 million) in 2008. SNC’s earnings mainly rose because it paid less for building materials and labour....