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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IGM FINANCIAL INC. $33 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 262.4 million; Market cap: $8.7 billion; Price-to-sales ratio: 3.2; SI Rating: Above Average) is Canada’s largest mutual fund company. It manages $98.8 billion of assets. Power Corp. owns 56.4% of IGM. IGM has three divisions. Investors Group sells funds through its own network of advisors. Mackenzie Financial sells its funds through independent brokers. IGM also owns 74.5% of Investment Planning Counsel, whose 700 advisors provide wealth-management services to individuals. IGM has few operations outside of Canada. The sharp stock market drop in the latter half of 2008 hurt demand for IGM’s mutual funds. As a result, the company’s earnings dropped 11.3%, to $766.1 million from $863.8 million in 2007. Per-share earnings fell 10.5%, to $2.89 from $3.23, on fewer shares outstanding. IGM owns around 4% of Great-West Lifeco, and these figures exclude its share of Great-West’s writedown of its purchase of Putnam Investments. IGM’s 2008 revenue fell 6.6%, to $2.7 billion from $2.9 billion....
FINNING INTERNATIONAL INC. $11 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 170.5 million; Market cap: $1.9 billion; Price-to-sales ratio: 0.3; SI Rating: Above Average) sells, rents and repairs heavy equipment made by Caterpillar Inc. It has major customers in the mining, forest products and construction industries. Finning’s revenue rose 5.8% in 2008, to $6 billion from $5.7 billion in 2007. Finning’s clients ordered more heavy equipment in the first half of the year as a result of high commodity prices. Finning’s operations in the U.K. and South America account for roughly 45% of its sales, and the drop in the Canadian dollar in the last quarter of 2008 increased the contribution from these divisions. Finning is responding to the global recession by cutting jobs. If you exclude costs related to this, and a writedown of goodwill, earnings fell 11.7%, to $247.4 million from $280.1 million. Earnings per share fell 7.7%, to $1.43 from $1.55 on fewer shares outstanding....
MANITOBA TELECOM SERVICES INC. $33 (Toronto symbol MBT; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 64.6 million; Market cap: $2.1 billion; Price-to-sales ratio: 1.1; SI Rating: Average) has over 1.2 million telephone and wireless customers in Manitoba. It also owns Allstream, which provides integrated telephone, Internet and other communication services to businesses across Canada. Allstream accounted for 57% of Manitoba Telecom’s 2008 revenue, but just 37% of its profit. Manitoba Telecom is launching new services, which are helping it hang on to its telephone customers. For example, its TV service, which uses high-speed Internet technology to send signals over regular phone lines, now has 34% of the Winnipeg market, up from 32% a year earlier. Manitoba Telecom’s 2008 revenue rose 0.8%, to $1.92 billion from $1.9 billion in 2007. Strong demand for wireless, Internet and TV services was entirely responsible for the gain; Allstream’s revenues were flat. Manitoba Telecom’s earnings per share dropped 14.2%, to $2.23 from $2.60. If you disregard unusual items, including a $0.28 per share charge related to last year’s purchase of new wireless frequencies, per-share earnings rose 3.1%, to $2.98 from $2.89....
TELUS CORP. (Toronto symbols T $31 and T.A $30; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 317.2 million; Market cap: $10.3 billion; Price-to-sales ratio: 1.0; SI Rating: Above Average) has 4.2 million phone customers and 2.1 million Internet subscribers in Alberta, British Columbia and parts of Quebec. Telus also operates a national wireless service with 6.1 million subscribers. Wireless provides roughly half of Telus’s revenue and earnings. This is a much higher percentage than other Canadian telephone companies. In 2008, Telus’s revenue rose 6.4%, to $9.65 billion from $9.1 billion in 2007. Wireless revenues rose 8.6%, thanks to the growing popularity of smartphones, which let users access the Internet and send and receive email. (Telus charges higher fees for these services than it does for regular voice calls.) Telus also successfully launched Koodo, a new brand aimed at first-time cellphone buyers, in March 2008. Revenue at Telus’s traditional phone division rose 4.4%, mainly on strong demand for high-speed Internet services. Telus’s 2008 earnings fell 10.3%, to $1.1 billion from $1.3 billion in the prior year. Earnings per share fell 6.6%, to $3.51 from $3.76, on fewer shares outstanding. The earnings drop was mainly because of lower taxes in 2007 thanks to one-time income-tax adjustments....
BELL ALIANT REGIONAL COMMUNICATIONS INCOME FUND $25 (Toronto symbol BA.UN; Conservative Growth Portfolio, Utilities sector; Units outstanding: 227.6 million; Market cap: $5.7 billion; Price-to-sales ratio: 1.7; SI Rating: Above Average) has 3.1 million telephone customers in Atlantic Canada and rural parts of Ontario and Quebec. As part of the deal that created the trust in 2006, Bell Aliant transferred most of its wireless business to BCE, which owns 44% of Bell Aliant. Strong demand for high-speed Internet service is helping Bell Aliant offset the loss of regular phone customers. In 2008, revenue grew 0.9%, to $3.28 billion from $3.25 billion in 2007. However, earnings rose 6.9%, to $331.9 million from $310.4 million. Per-unit earnings rose just 1.5%, to $2.07 from $2.04, on more units outstanding. These figures include restructuring and related charges....
BCE INC. $24 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 803.1 million; Market cap: $19.3 billion; Price-to-sales ratio: 1.1; SI Rating: Above Average) has over 7.5 million telephone and Internet customers in Ontario and Quebec. It also has 6.5 million wireless subscribers across Canada. BCE continues to lose traditional phone customers, but these losses are slowing. Meanwhile, BCE’s cellphone business is growing strongly. The wireless division’s 2008 revenue rose 7.6%, and its subscriber base grew by 4.5%. Wireless accounts for 25% of BCE’s revenue and 43% of its profit. BCE hopes to spur sales of its wireless and other services, like satellite TV, with a new deal to buy “The Source”, a 756-store home-electronics chain in Canada. BCE already operates about 750 retail stores....
CANADIAN PACIFIC RAILWAY LTD. $36 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 167.7 million; Market cap: $6 billion; Price-to-sales ratio: 1.2; SI Rating: Above Average) ships freight over a 25,000-kilometre rail network between Montreal and Vancouver. In the United States, its subsidiaries connect its Canadian lines to major hubs in the midwest and northeast. Alliances with other railways extend CP’s reach to Mexico. CP made 29% of its 2008 revenues hauling shipping containers loaded with a variety of goods. Grain accounted for 20% of its revenues, followed by industrial products (16%), coal (13%), fertilizers (10%), automotive products (7%) and forest products (5%). CP’s many revenue sources cut its reliance on any single commodity or industry. Thanks largely to expanding trade with Asia, CP’s revenue rose 20.6%, from $3.9 billion in 2004 to $4.7 billion in 2007. Earnings rose 87.1%, from $359.5 million in 2004 to $672.8 million in 2007. Earnings per share rose 91.2%, from $2.26 to $4.32 on fewer shares outstanding....
GENNUM CORP. $4.40 (Toronto symbol GND; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.6 million; Market cap: $156.6 million; Price-to-sales ratio: 1.0; SI Rating: Above Average) makes equipment that stores, manipulates and transfers video signals. Foreign markets account for 85% of its total sales. Gennum spends nearly 30% of its revenue on research, which helps it maintain its high share of this niche market. Gennum has $48.7 million, or $1.37 a share, in cash, and just $2 million in debt (all amounts in U.S. dollars except share price and market cap), so it can afford these research costs. In the year ended November 30, 2008, earnings rose 6.9%, to $0.62 a share, for a total of $22.0 million, from $0.58 a share ($20.9 million) a year earlier. These figures exclude unusual items. Sales grew 24.7%, to $126.9 million from $101.8 million....
CAE INC. $7.39 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 254.9 million; Market cap: $1.9 billion; Price-to-sales ratio: 1.3; SI Rating: Average) is a leading maker of flight simulators. It also provides pilot-training services in 20 countries. CAE gets 90% of its revenue from customers outside of Canada. The slowing economy could hurt simulator demand from airlines, which operate in a cyclical industry. However, CAE’s growing military operations help cut its risk. In fact, the company recently won several new military-related contracts worth a total of $80 million. Military operations account for 45% of CAE’s revenue. In its third fiscal quarter ended December 31, 2008, CAE’s revenue rose 23.1%, to $424.6 million from $344.8 million a year earlier. Earnings improved 32.9%, to $53.3 million from $40.1 million. Earnings per share rose 31.3%, to $0.21 from $0.16. CAE typically spends around 6% of its revenue on research....
CANADIAN UTILITIES LTD. $39 (Toronto symbol CU; Income Portfolio, Utilities sector; Shares outstanding: 125.5 million; Market cap: $5 billion; Price-to-sales ratio: 2.0; SI Rating: Above Average) distributes electricity and natural gas in Alberta. It also operates power plants and sells its expertise to other companies. Canadian Utilities recently raised its quarterly dividend by 6.0%, to $0.3525 a share from $0.3325. The new annual rate of $1.41 yields 3.6%. It has increased its dividend each year since 1972. In the three months ended September 30, 2008, Canadian Utilities earned $0.57 a share, for a total $71.3 million, before unusual items, up 1.8% from $0.56 ($70.6 million) a year earlier. Higher depreciation charges at its gas operations offset gains from its engineering-services division. Revenue jumped 30.3%, to $638.4 million from $489.9 million, partly due to higher power rates....