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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BCE INC. $23 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 806.2 million; Market cap: $18.5 billion; SI Rating: Above average) provides telephone service to over 7.5 million residential and business customers in Ontario and Quebec. BCE also provides wireless service to 6.4 million subscribers across Canada. In June, 2007, BCE accepted a $42.75-a-share all-cash takeover offer from a private consortium led by the Ontario Teachers’ Pension Plan. The deal required auditing firm KPMG to provide an opinion on BCE’s solvency following the takeover. KPMG’s preliminary analysis shows that BCE’s liabilities would probably exceed the value of its assets. KPMG’s report effectively killed the takeover. BCE recently stopped paying dividends on its common shares as part of deal with the consortium to help ensure that takeover would go through. Now that the deal is dead, BCE will probably resume quarterly dividend payments. The previous annual rate of $1.46 would now yield 6.3%....
MOLSON COORS CANADA INC. (Toronto symbols TPX.A $50 and TPX.B $50; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 183.6 million; Market cap: $9.2 billion; SI Rating: Average) recently merged its brewing operations in the United States into a new joint venture with the parent company of Miller Brewing. Molson Coors has a 50% voting stake in this new company, called MillerCoors, although just a 42% economic interest. MillerCoors aims to cut its annual costs by $500 million (all amounts except share prices and market cap in U.S. dollars). Molson Coors is also making good progress with its own plan to cut annual expenses by $250 million. Thanks partly to these savings, Molson Coors earned $175.8 million in the third quarter of 2008, up 1.5% from $173.2 million a year earlier. Earnings per share were unchanged at $0.95. These figures exclude unusual items....
ANDREW PELLER LTD. $7.50 (Toronto symbol ADW.A; Income Portfolio, Consumer sector: Shares outstanding: 14.9 million; Market cap: $111.8 million; SI Rating: Above average) continues to benefit from strong demand for premium wines, as well as from new products and acquisitions. In its second fiscal quarter ended September 30, 2008, sales rose 13.3%, to $69.4 million from $61.2 million a year earlier. Earnings fell 7.8%, to $2.4 million or $0.17 a share from $2.7 million or $0.18 a share. However, the latest earnings included roughly $1.2 million in unusual pre-tax losses on interest rate and foreign exchange hedging contracts. The company will likely earn $0.85 a share in fiscal 2009, and the stock trades at 8.8 times that estimate. The $0.33 dividend yields 4.4%....
RIOCAN REAL ESTATE INVESTMENT TRUST $15 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 221.0 million; Market cap: $3.3 billion; SI Rating: Average) is Canada’s largest real estate investment trust. It owns 238 retail properties, including 14 under development, comprising an aggregate of over 58 million square feet. Ottawa has exempted real estate trusts from its new taxation rules, as long they meet certain technical requirements. RioCan plans to ensure that it continues to qualify as a REIT. RioCan’s focus on suburban retail malls could hurt its earnings if consumer confidence continues to weaken. However, RioCan gets 83.6% of its revenue from national and anchor tenants such as Wal-Mart and Loblaw. Dominant retailers like these have the financial strength to weather the current downturn. As well, no individual tenant accounts for more than 6% of RioCan’s revenue....
PENGROWTH ENERGY TRUST $11 (Toronto symbol PGF.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 254.9 million; Market cap: $2.8 billion; SI Rating: Average) produces oil and natural gas from, mainly from properties in Alberta and British Columbia. It also owns 8.4% of the Sable Offshore Energy project, which extracts natural gas from several offshore fields south of Nova Scotia. Natural gas accounts for 60% of its production, while oil supplies the remaining 40%. Pengrowth is down lately, along with most other oil and gas producers, due to falling energy prices. However, Pengrowth’s cash flow seems sufficient to let it keep paying monthly distributions of $0.225 a unit. That gives it a high current yield of 24.5%. Pengrowth paid out 62% of its cash flow as distributions in the latest quarter, down from 79% a year earlier. In the three months ended September 30, 2008, Pengrowth’s earnings soared to $1.69 a unit (total $422.4 million) from $0.66 a unit ($161.5 million) a year earlier. Most of the increase came from unrealized gains on oil and natural gas hedging contracts. Cash flow per unit rose 23.6%, to a record $1.10 from $0.89. Revenue grew 23.3%, to $518.7 million from $420.7 million. A 27% rise in realized energy prices more than offset a 5% drop in average daily production....
PRECISION DRILLING TRUST $11 (Toronto symbol PD.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 125.8 million; Market cap: $1.4 billion; SI Rating: Extra risk) is Canada’s largest provider of contract drilling and related services to the oil and natural gas exploration industry. Precision currently operates 249 drilling rigs, mainly in Canada. However, many of its Canadian customers suspend exploration during the winter. Precision now aims to expand its operations in the United States with its upcoming purchase of Grey Wolf Inc., which operates 122 drilling rigs in the U.S. Gulf Coast and Midwest regions. The purchase will make Precision one of the largest providers of drilling services in North America....
BELL ALIANT REGIONAL COMMUNICATIONS INCOME FUND $25 (Toronto symbol BA.UN; Conservative Growth Portfolio, Utilities sector; Units outstanding: 127.0 million; Market cap: $3.2 billion; SI Rating: Above average) is the main provider of telephone service in Atlantic Canada and rural areas of Ontario and Quebec. Bell Aliant transferred its wireless operations to BCE Inc. as part of the deal that created the trust in July, 2006. BCE owns about 45% of Bell Aliant. Under a new deal, Bell Aliant will now help BCE upgrade its wireless networks in Atlantic Canada and rural areas of Ontario and Quebec. These upgrades will improve the speed and reliability of connections between BCE’s wireless networks and Bell Aliant’s traditional phone systems. That should help Bell Aliant profit from rising use of mobile devices to receive email and connect to the Internet....
BANK OF NOVA SCOTIA $38 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; Shares outstanding: 990.0 million; Market cap: $37.6 billion; SI Rating: Above average) is Canada’s third-largest bank after Royal Bank and Toronto-Dominion Bank, with total assets of $462.4 billion. It provides a wide variety of financial services through 2,560 branches and offices in Canada and over 50 other countries. The bank gets about a third of its revenue and earnings from its international operations. Unlike other Canadian banks, it has largely avoided expanding in the United States. That has helped it escape the big writedowns related to U.S. subprime mortgages. Instead, Bank of Nova Scotia prefers to focus on international regions such as Latin America, the Caribbean and Asia, where it can quickly expand its market share. Thanks to the spread of free trade and rising global prosperity, Bank of Nova Scotia’s revenue rose from $10.0 billion in 2003 (fiscal years end October 31) to $12.5 billion in 2007. Earnings grew from $2.34 a share (total $2.4 billion) in 2003 to $4.01 a share ($4.0 billion) in 2007....
These are difficult times for income-seeking investors. Bonds yield around half of what they did 10 years ago. Yet more and more investors have reached an age when they pay close attention to investment income, to pay for retirement or because they see income as a sign of investment quality. This has renewed investor interest in income trusts. Despite Ottawa’s plans to start taxing trust distributions in 2011, they should continue to pay above-average yields for years to come. Unfortunately, however, high current yields on the majority of trusts obscure their drawbacks. Income seekers may assume that yearly distributions on income trusts are likely to hold steady like interest on a bond, or rise like dividends on a stock. But in the long term, all too many trust distributions are more apt to dwindle or halt abruptly. That’s because many trusts own so-called ‘cash cow’ businesses. These are businesses that can be milked for their cash flow for years to come, but that are likely to stagnate or stumble as the economy changes and competition grows....
FORT CHICAGO ENERGY TRUST $8.68 (Toronto symbol FCE.UN; Shares outstanding: 134.1 million; Market cap: $1.2 billion; SI Rating: Extra Risk) owns 50% of the Alliance Pipeline, which runs 3,000 kilometres from Fort St. John, B.C., to Chicago. Enbridge Inc. owns the other 50% interest. The two partners also own 85.4% of the Aux Sable natural gas liquids plant. As well, Fort Chicago owns the 1,324-kilometre Alberta Ethane Gathering System. Fort Chicago has added to its power-plant interests over the last couple of years. It now owns natural gas-fired cogeneration facilities in Ontario and California, plus power generation systems in Ontario and Prince Edward Island. It recently bought the Brush II Cogeneration plant in Colorado for $32 million U.S. In the three months ended June 30, 2008, Fort Chicago’s revenue rose 31.4%, to $178.7 million from $135.9 million a year earlier. The higher revenue mainly resulted from Fort Chicago’s purchase of Countryside Canada Power in August 2007. Cash flow per unit rose 3.3% in the quarter, to $0.31 from $0.30....