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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TRANSCANADA CORP. $36 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 684.4 million; Market cap: $24.6 billion; Price-to-sales ratio: 2.6; Dividend yield: 4.4%; SI Rating: Above Average) operates a 60,000-kilometre pipeline network that pumps natural gas from Alberta to eastern Canada and the U.S. The company’s pipelines supply 20% of North America’s natural gas. In 2009, TransCanada’s pipelines accounted for 53% of its revenue and 73% of its earnings. The remaining 47% of revenue and 27% of earnings come from the company’s electrical power plants. TransCanada owns or has stakes in 20 plants in Alberta, Ontario, Quebec and the northeastern U.S. The company’s revenue rose 44.2%, from $6.1 billion in 2005 to $8.8 billion in 2007. Revenue fell 2.4%, to $8.6 billion, in 2008. However, revenue rose 4.0%, to $9.0 billion, in 2009, mainly because of the contributions of new power plants....
We think investors will profit most — and with the least risk — by buying shares of well-established, dividend-paying stocks with strong business prospects. These are companies that have strong positions in healthy industries. They also have strong management that will make the right moves to remain competitive in a changing marketplace. Here are 3 ways dividend paying stocks can help improve your portfolio’s long-term returns:...
MANITOBA TELECOM SERVICES INC. $31 (Toronto symbol MBT; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 64.7 million; Market cap: $2.0 billion; Price-to-sales ratio: 1.7; Dividend yield: 8.4%; SI Rating: Average) is the main provider of telephone services in Manitoba. The company’s Allstream subsidiary sells integrated telephone, Internet and other communication services to businesses across Canada. The company gets 70% of its profit from its Manitoba telephone business. However, a new alliance with Rogers Communications Inc. (Toronto symbol RCI.B) should broaden its geographic reach. The two companies are building a new high-speed wireless network in Manitoba. This alliance will make Manitoba Telecom more competitive in Manitoba, and let the company use Rogers’ existing network to sell more wireless services to its business customers in other parts of Canada. In 2009, Manitoba Telecom earned $103.9 million, or $1.61 a share. That’s down 29.5% from $147.4 million, or $2.28 a share, in the prior year. If you disregard restructuring costs and other unusual items, earnings per share would have fallen 12.9%, to $2.64 from $3.03. Revenue fell 3.1%, to $1.8 billion from $1.9 billion....
BELL ALIANT REGIONAL COMMUNICATIONS INCOME FUND $25 (Toronto symbol BA.UN; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 228.4 million; Market cap: $5.7 billion; Price-to-sales ratio: 1.8; Dividend yield: 11.6%; SI Rating: Above Average) provides telephone services in Atlantic Canada, as well as rural parts of Ontario and Quebec. As part of the deal that created the trust in 2006, Bell Aliant transferred its wireless operations to BCE, which owns 45% of the trust. Bell Aliant earned $373.0 million in 2009. That’s up 10.8% from $336.6 million in 2008. Earnings per unit rose 11.5%, to $2.33 from $2.09, on more units outstanding....
TELUS CORP. (Toronto symbols T $33 and T.A $32; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 318.0 million; Market cap: $10.5 billion; Price-to-sales ratio: 1.1; Dividend yield: 5.8%; SI Rating: Above Average) provides telephone services in British Columbia, Alberta and eastern Quebec. It also sells wireless services through a nationwide network. The company expects its revenue to rise by 2% to 5% in 2010, to between $9.8 billion and $10.1 billion. Most of the gain will come from its wireless division, which contributes half of Telus’s revenue and earnings. This division recently upgraded its networks to handle a wider variety of cellphones, including Apple’s popular iPhone smartphone. Telus should also profit as more people use their cellphones to send email, access the Internet and download software. That’s good news for Telus, since it earns higher fees for Internet access than regular phone calls. Moreover, the company’s wireless upgrades will help it capture more roaming fees from foreign tourists and business travellers who use their phones while in Canada....
BCE INC. $29 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 767.2 million; Market cap: $22.2 billion; Price-to-sales ratio: 1.3; Dividend yield: 6.0%; SI Rating: Above Average) provides telephone and Internet services in Ontario and Quebec. It also sells wireless and satellite TV services across Canada. BCE is starting to see the benefits of a restructuring plan that it began in July 2008. Under the plan, the company cut jobs, relocated employees and sold extra real estate. These moves should save BCE $400 million annually by the end of this year. In 2009, BCE’s earnings rose 6.5%, to $1.9 billion from $1.8 billion in the prior year. Per-share earnings rose 11.1%, to $2.50 from $2.25, on fewer shares outstanding. These figures exclude restructuring costs and other unusual items. Revenue rose 0.4%, to $17.74 billion from $17.66 billion....
AGRIUM INC. $67 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 157 million; Market cap: $10.5 billion; Price-to-sales ratio: 1.1; Dividend yield: 0.2%; SI Rating: Average) makes fertilizers from natural gas at 10 plants in North America and Argentina. It also produces other fertilizers, such as potash and phosphate, from mines in Ontario, Alberta, Saskatchewan and Idaho. Agrium sells its products to industrial users and individual farmers through 1,000 retail stores in Canada, the U.S., Argentina and Chile. Agrium’s retail outlets cut its reliance on bulk fertilizer sales. Thanks to rising fertilizer prices, Agrium’s sales rose 204.5%, from $3.3 billion in 2005 to $10.0 billion in 2008 (all amounts except share price and market cap in U.S. dollars). However, sales fell 9.0%, to $9.1 billion on lower 2009 fertilizer prices....
POTASH CORP. OF SASKATCHEWAN INC. $112 (Toronto symbol POT; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 296.0 million; Market cap: $33.2 billion; Price-to-sales ratio: 7.8; Dividend yield: 0.4%; SI Rating: Average) is the world’s largest fertilizer producer. It has six potash mines in Saskatchewan and one in New Brunswick. Five of its mines have reserves of between 60 and 97 years. Potash Corp.’s sales rose 145.5%, from $3.8 billion in 2005 to $9.4 billion in 2008 (all amounts except share price and market cap in U.S. dollars). That’s mainly because potash prices climbed from $143 a tonne in 2005 to $449 a tonne in 2008. Thanks to the higher prices, Potash Corp.’s earnings soared from $1.63 a share (or a total of $542.9 million) in 2005 to $11.01 a share (or $3.5 billion) in 2008. Cash flow per share rose 411.9%, from $2.53 in 2005 to $12.95 in 2008....
A rebounding global economy should continue to push up resource prices. That will help Canadian income trusts that serve the resource sector, including Precision Drilling Trust (symbol PD.UN on Toronto). Precision provides contract-drilling services to oil and gas producers, mainly in western Canada. In light of recent developments surrounding Precision, we’ve updated our buy/sell/hold advice on the trust in the current issue of The Successful Investor. (Read on to find out how you can get a free copy of this issue. Along with our latest buy/sell/hold advice on Precision, it contains our full analysis of 16 other investments that could be suitable for your portfolio.)
New tax will put Canadian income trusts on an equal footing with regular corporations
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CGI GROUP INC. $15 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 297.0 million; Market cap: $4.5 billion; Price-to-sales ratio: 1.2; No dividends paid; SI Rating: Extra Risk) is Canada’s largest provider of computer-outsourcing and information-technology services. It also operates in 15 other countries. Canada provided 57% of CGI’s revenue in its latest year, followed by the U.S./India (36%) and Europe/Asia (7%). CGI’s main businesses are: 1) Outsourcing: CGI takes over all or part of a client’s information-technology and related functions. That lets the client cut costs and gain ongoing access to the most current computer technology. Outsourcing accounts for 60% of CGI’s revenue. 2) Consulting: In addition to technical expertise, CGI aims to ensure that its consultants have knowledge of the business issues in their clients’ industries or sectors....