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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TORONTO-DOMINION BANK $39 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; Shares outstanding: 810.1 million; Market cap: $31.6 billion; Price-to-sales ratio: 1.2; SI Rating: Above Average) is the second-largest Canadian bank, with assets of $563.2 billion. Like Royal, TD has built up its U.S. operations over the past few years. It has focused more on retail banking, however, which is more stable than brokerage services or wealth management. Retail banking in Canada and the U.S. now accounts for roughly 80% of TD’s earnings.

Writedowns hurt 2008 earnings

TD is not immune to the current financial crisis. In fiscal 2008, earnings at TD’s wholesale banking division fell 92%, due to $350 million in trading losses and writedowns of illiquid securities....
ROYAL BANK OF CANADA $30 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.3 billion; Market cap: $39 billion; Price-to-sales ratio: 1.4; SI Rating: Above Average) is Canada’s largest bank, with total assets of $723.9 billion. Royal continues to expand its operations in the United States. These now account for 17% of its revenue, and have increased Royal’s exposure to the struggling U.S. housing market. In the fiscal year ended October 31, 2008, earnings declined 17.1%, to $4.6 billion from $5.5 billion in the prior year. Earnings per share fell 19.3%, to $3.38 from $4.19 on more shares outstanding. The drop was largely due to a 101.6% increase in loan-loss provisions. Troubled loans now account for 0.96% of total loans, up from 0.45% a year earlier....
TRANSCONTINENTAL INC. $8.50 (Toronto symbol TCL.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 80.8 million; Market cap: $686.8 million; Price-to-sales ratio: 0.3; SI Rating: Average) now trades at just 5.1 times its forward earnings estimate of $1.66 a share. That’s mainly because advertisers are shifting away from traditional direct mail services to the Internet. Direct marketing accounts for 50% of Transcontinental’s revenue, and 40% of its profit. Transcontinental is also a major commercial printer (25% of revenue, 30% of profit). Many of its major customers, such as newspaper publishers, are now stagnating as the slowing economy hurts their circulation sales and advertising revenues. The slowdown is also putting pressure on Transcontinental’s own publishing operations, which consists of 42 magazines and 172 newspapers, primarily in eastern Canada (25% of revenue, 30% of profit)....
METRO INC. $37 (Toronto symbol MRU.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 110.6 million; Market cap: $4.9 billion; Price-to-sales ratio: 0.4; SI Rating: Average) operates 558 food stores and 268 drugstores in Ontario and Quebec. The company earned $281.3 million in the fiscal year ended September 27, 2008, down 4.6% from $295.0 million in the prior year. Earnings per share fell 2.0%, to $2.48 from $2.53 a year earlier, on fewer shares outstanding. These figures exclude unusual items. Sales rose 0.8%, to $10.7 billion from $10.6 billion. Long-term debt of $1.0 billion is 20% of Metro’s market cap. Metro holds cash of $151.7 million or $1.37 a share. The $0.50 dividend yields 1.4%. Metro’s class ‘A’ subordinate voting shares have jumped by 40% in the past three months. However, they still trade at a reasonable 13.9 times the $2.67 a share that Metro should earn in fiscal 2009....
LOBLAW COMPANIES LTD. $37 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 274.2 million; Market cap: $10.1 billion; Price-to-sales ratio: 0.3; SI Rating: Above average) is Canada’s largest grocery store operator, with over 1,000 stores. The company’s plan to re-model older stores, improve its distribution systems and rejuvenate its private label products is starting to pay off. In the three months ended October 4, 2008, earnings per share rose 8.9%, to $0.61 from $0.56 a year earlier. These figures exclude unusual items. Sales grew 3.9%, to $9.5 billion from $9.1 billion. Same-store sales rose 3.0%. Long-term of $4.0 billion is equal to 40% of its market cap. Loblaw holds $690 million or $2.52 a share in cash. The stock has gained 30% in the past two months, largely due to speculation that parent company George Weston Ltd. plans to buy the 39% of the company that it does not already own....
SAPUTO INC. $20 (Toronto symbol SAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 206.8 million; Market cap: $4.1 billion; Price-to-sales ratio: 0.8; SI Rating: Average) is Canada’s largest producer of dairy products including milk, butter and cheese. Its main dairy brands include Saputo, Stella and Dairyland. Saputo also makes snack cakes and tarts. Saputo reached its current size mainly through acquisitions outside of Canada. Recent purchases include the west coast industrial cheese business of U.S.-based Land O’ Lakes Inc. for $249.2 million, and a Wisconsin-based cheese maker for $161.0 million. Saputo has also used acquisitions to expand to Argentina and Europe. Its international operations now supply about 40% of its revenue, and 30% of its earnings. Expanding through acquisitions is riskier than internal growth. Saputo cuts this risk by identifying smaller, less efficient businesses that would benefit from its economies of scale and marketing expertise....
MAPLE LEAF FOODS INC. $10 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 126.3 million; Market cap: $1.3 billion; Price-to-sales ratio: 0.2; SI Rating: Average) continues to make progress with its multi-year restructuring plan. This mainly includes a shift to packaged meats under the Maple Leaf and Schneider brands, which generate higher earnings for it than fresh meats. The plan should increase Maple Leaf’s annual operating earnings (profits after regular operating costs) by $100 million by 2010. The company has now agreed to settle several class action lawsuits stemming from the listeria outbreak at its Toronto meat-processing plant. The settlement will cost it $25 million to $27 million. To put these lawsuits in perspective, Maple Leaf lost $0.10 a share (total $12.9 million) in the three months ended September 30, 2008. It earned $0.01 a share ($1.7 million) in the year-earlier quarter. If you exclude the costs to recall contaminated products and other unusual items, per-share earnings rose 116.7%, to $0.13 a share ($16.4 million) from $0.06 a share ($7.7 million). Revenue grew 3.3%, to $1.34 billion from $1.30 billion....
GENNUM CORP. $5.69 (Toronto symbol GND, Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.6 million; Market cap: $202.6 million; Price-to-sales ratio: 1.6; SI Rating: Above average) has dropped 55.5% from $12.40 in January, 2008....
LINAMAR CORP. $3.71 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 65.1 million; Market cap: $241.5 million; Price-to-sales ratio: 0.1; SI Rating: Extra risk) gets 85% of its revenue from carmakers, and falling auto sales have hurt its earnings....
SHAWCOR LTD. $17 (Toronto symbol SCL.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 70.6 million; Market cap: $1.2 billion; Price-to-sales ratio: 1.0; SI Rating: Average) is down 54.7% since reaching $37.52 in June, 2008....