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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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.)
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New tax will put Canadian income trusts on an equal footing with regular corporations
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....
ROYAL BANK OF CANADA $56 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.4 billion; Market cap: $78.4 billion; Price-to-sales ratio: 2.1; Dividend yield: 3.6%; SI Rating: Above Average) is Canada’s largest bank, with total assets of $655.0 billion. Royal is seeing strong demand for loans because of low interest rates. As well, improving financial markets have helped its capital-markets division attract new business. This division, which Royal has steadily expanded in the past few years, helps companies raise capital by selling shares and issuing debt. It now provides 25% of the bank’s total revenue. In the year ended October 31, 2009, Royal’s revenue rose 34.9%, to $29.1 billion from $21.6 billion in the prior year. Earnings rose 6.7%, to $4.9 billion from $4.4 billion. However, earnings per share fell 3.0%, to $3.28 from $3.38, on 7% more shares outstanding. The 2009 figures exclude a $1-billion writedown of goodwill related to Royal’s U.S. operations. Its U.S. and international banking division supplies roughly 10% of its revenue....
TORONTO-DOMINION BANK $64 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; Shares outstanding: 858.8 million; Market cap: $55.0 billion; Price-to-sales ratio: 2.2; Dividend yield: 3.8%; SI Rating: Above Average) is the second-largest Canadian bank, with total assets of $557.2 billion. TD has now fully integrated Commerce Bancorp Inc. with its other U.S. banking operations. The bank paid $8.5 billion for Commerce in May 2008. It now operates as “TD Bank,” and has 1,028 branches from Maine to Florida. The U.S. banking business provides 16% of TD’s overall profits. If you include $276-million in integration costs and $576-million of writedowns of securities, TD’s earnings in the year ended October 31, 2009, fell 18.6%, to $3.1 billion from $3.8 billion in the prior year. Earnings per share fell 28.7%, to $3.47 from $4.87, on more shares outstanding. Revenue rose 21.8%, to $17.9 billion from $14.7 billion, as low interest rates spurred strong demand for new loans....
BANK OF NOVA SCOTIA $47 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.0 billion; Market cap: $47.0 billion; Price-to-sales ratio: 1.9; Dividend yield: 4.2%; SI Rating: Above Average) is Canada’s third-largest bank, with total assets of $496.5 billion. Bank of Nova Scotia is the most international of the big-five banks. It gets about 30% of its earnings from its overseas operations, which are mainly in the Caribbean, Latin America and Asia. These businesses have struggled lately, as the global recession pushed up loan losses. But the rebounding world economy gives them long-term appeal. The bank earned $3.5 billion in the year ended October 31, 2009. That’s up 13.0% from $3.1 billion in the prior year. Earnings per share rose 8.5%, to $3.31 from $3.05, on more shares outstanding. If you exclude writedowns of securities, it would have earned $3.70 a share in 2009. Revenue rose 21.7%, to $14.5 billion from $11.9 billion....
BANK OF MONTREAL $54 (Toronto symbol BMO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 550.5 million; Market cap: $29.7 billion; Price-to-sales ratio: 1.9; Dividend yield: 5.2%; SI Rating: Above Average) is the fourth-largest Canadian bank, with total assets of $388.5 billion. The bank earned $1.8 billion in fiscal 2009, down 9.7% from $2.0 billion in the prior year. Earnings per share fell 18.1%, to $3.08 from $3.76, on more shares outstanding. Excluding writedowns and other unusual items, the bank would have earned $4.02 a share in fiscal 2009. Revenue rose 8.4%, to $11.1 billion from $10.2 billion. That’s mainly because low interest rates continue to push up demand for mortgages and other loans....