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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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....
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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....
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....
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