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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GREAT-WEST LIFECO INC. $32 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 894.4 million; Market cap: $28.6 billion; SI Rating: Above average) is Canada’s largest insurance company, with assets under administration of $392.8 billion. The company also provides retirement planning and wealth management services. Power Corp. controls 70.6% of Great-West’s shares. The company recently sold its U.S. health care business for $1.3 billion. This business faces strong competition from larger insurers, whose size lets them negotiate better terms with medical service suppliers, so selling it made sense. The cash will help Great- West fund last year’s purchase of struggling U.S.-based mutual fund manager Putnam Investment Trust. Putnam increases Great-West’s exposure to volatile stock markets. However, the acquisition gives it an opportunity to market its products to Putnam’s large client base....
TELUS CORP. (Toronto symbols T $40 and T.A $39; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 335.6 million; Market cap $13.4 billion; SI Rating: Above average) provides local and long distance telephone service to 4.3 million customers in Alberta, British Columbia and Eastern Quebec. This business supplies about 29% of Telus’s revenue. The company also operates a national wireless communication network with 5.8 million subscribers. The wireless business accounts for 47% of its revenue. The remaining 24% of Telus’s revenue comes from providing Internet service to individuals and businesses. It has 1.1 million high-speed Internet subscribers....
Maple Leaf Foods Inc. $11 (Toronto symbol MFI Conservative Growth Portfolio, Consumer sector; Shares outstanding: 126.9 million; Market cap: $1.4 billion; SI Rating: Average) is Canada’s largest food processing company. Its products include fresh and prepared meats and poultry, mostly under the Maple Leaf and Schneider brands. It also makes fresh and frozen bakery products through 89.8%-owned Canada Bread Co. Ltd. Maple Leaf is currently in the middle of major restructuring that will see it focus on more-profitable packaged meats and meals. In the past two years, it has sold its animal feed operations and scaled back its hog-processing operations. The company is also investing heavily in new plants and equipment. It will probably take Maple Leaf another few months before it starts to realize the full benefits of its plan. Meanwhile, sharply higher prices for grains and energy continue to hurt its profitability. Exports account for about 30% of the company’s sales, and the stronger Canadian dollar also makes its products more expensive outside of Canada.Maple Leaf’s sales rose from $4.2 billion in 2003 to $5.6 billion in 2005, but fell to $5.2 billion in 2007. Earnings before unusual items grew from $0.04 a share (total $83 million) in 2003 to $0.59 a share ($201 million) in 2005. Earnings fell to $0.38 a share ($173 million) in 2006, but improved to $0.51 a share ($199 million) in 2007....
Canada Bread Co., Ltd. $60 (Toronto Symbol CBY Conservative Growth Portfolio, Consumer sector; Shares outstanding: 25.4 million; Market cap: $1.5 billion; SI Rating: Above average) makes a wide variety of baked goods such as bread, bagels and rolls. It also makes specialty pasta and sauces. Major brands include Dempster’s, Olivieri, and Olafson’s. Canada Bread accounts for about 30% of Maple Leaf’s sales. Thanks partly to acquisitions, Canada Bread’s sales rose from $1.2 billion in 2003 to $1.5 billion in 2007. Earnings before one-time items rose from $1.61 a share (total $63 million) in 2003 to $3.31 a share ($129 million) in 2007. Innovative products that take advantage of growing interest in healthy eating are also helping to expand Canada Bread’s earnings. For example, the company has developed a new bread that contains inulin, a fibre that improves digestion. Premium products like this generate higher profit margins for Canada Bread than its regular products....
Toronto-Dominion Bank $64 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; Shares outstanding: 802.9 million; Market cap: $51.4 billion; SI Rating: Above average) is Canada’s second-largest bank, with assets of $503.6 billion. TD recently completed its acquisition of U.S.-based Commerce Bancorp for $8.5 billion in cash and stock. To put the purchase price in context, TD earned $973 million or $1.32 a share in its second fiscal quarter ended April 30, 2008. The acquisition doubled TD’s retail banking operations in the United States to around 1,100 branches. TD estimates that its larger U.S. operations will contribute $750 million to its earnings in fiscal 2008, and $1.2 billion in 2009. The bank originally planned to re-brand all of its U.S. operations as “TD Commerce Bank”. However, a legal challenge from a smaller bank with a similar name prompted TD to make this change. It’s unlikely that dropping the Commerce name will force TD to writedown any of the $6.1 billion in goodwill it recorded on the purchase....
Bank of Montreal $49 (Toronto symbol BMO Conservative Growth Portfolio, Finance sector; Shares outstanding: 503.5 million; Market cap: $24.7 billion; SI Rating: Above average) is Canada’s fourth-largest bank, with assets of $375.2 billion. The bank recently restructured two of its investment vehicles that hold asset-backed securities. The restructuring averted potential writedowns and costs of as much as $1.5 billion. To put that in context, Bank of Montreal earned $642 million or $1.25 a share in its second fiscal quarter ended April 30, 2008. The latest earnings included a $57 million after-tax gain from the restructuring of these two investment vehicles. The restructuring also reduces the likelihood that Bank of Montreal will have to issue new shares. Bank of Montreal now aims to further cut its long-term risk by building up its retail operations, and shrinking its corporate and stock market businesses. It may also take advantage of the slowdown in the United States to expand its American operations. Bank of Montreal’s main U.S. asset is 100%-owned Harris Bank, which provides banking services in Chicago, Florida and Arizona....
Canadian Imperial Bank of Commerce $63 (Toronto symbol CM Conservative Growth Portfolio, Finance sector; Shares outstanding: 380.8 million; Market cap: $24.0 billion; SI Rating: Above average) is the fifth-largest bank in Canada with assets of $343.1 billion. The problems with U.S. subprime mortgages have hurt CIBC more than the other big five Canadian banks. So far, CIBC has written off $6 billion worth of loans and illiquid securities. CIBC could face a further $1 billion in writedowns due to concerns over the financial health of several major bond insurers. These insurers provide CIBC and other banks with guarantees on securities they hold, such as bonds backed by U.S. subprime mortgages. In the three months ended April 30, 2008, CIBC lost $1.1 billion or $3.00 a share, mainly due to $1.7 billion (after-tax) in writedowns....
Metro Inc. $25 (Toronto symbol MRU.A Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 111.9 million; Market cap: $2.8 billion; SI Rating: Extra risk) operates around 600 retail food stores under the Metro, Metro Plus, Super C, A&P, Dominion, Loeb and Food Basics banners. Metro has completed the first phase of its 2005 acquisition of A&P Canada, which operates 244 stores in Ontario. The first phase involved combining the two companies’ purchasing operations. That generated about $90 million in annual savings. To put that figure in context, Metro earned $58.1 million or $0.51 a share in its second quarter ended March 15, 2008. The company also installed a new computerized inventory management system in the A&P Canada stores. The second phase of the A&P Canada integration involves combining certain stores and private label products, and will probably begin later this year. Fewer banners will lower its marketing costs. As well, a single private label will give it more purchasing power with suppliers. Metro has not revealed how much it expects to save in this second phase, but the costs will probably offset the initial benefits....
BCE INC. $40 (Toronto symbol BCE, Conservative Growth Portfolio, Utilities sector; Shares outstanding: 805.8 million; Market cap: $32.2 billion; SI Rating: Above average) plans to cut its workforce by 6% and simplify its management structure. This will cost BCE $250 million, but should save it $300 million a year. In the three months ended June 30, 2008, BCE earned $425 million or $0.53 a share before one-time items. The consortium headed by the Ontario Teachers’ Pension Plan now aims to complete its $42.75-a-share takeover of BCE by December 11, 2008. Even if the deal falls through, the savings from this latest restructuring will help BCE compete with new entrants in the wireless market. BCE is still a buy.
Petro-Canada $47 (Toronto symbol PCA Conservative Growth Portfolio, Resources sector; Shares outstanding: 484.4 million; Market cap: $22.8 billion; SI Rating: Average) continues to profit from high energy prices, which offset lower production from its offshore operations in Eastern Canada. In the three months ended June 30, 2008, earnings rose 46.0% to $2.38 a share from $1.63 a year earlier. These figures exclude unusual items. Cash flow per share jumped 49.3%, to $4.09 from $2.74. Revenue grew 38.2%, to $7.6 billion from $5.5 billion. Thanks to the strong results, the company has raised its quarterly dividend by 53.8%, from $0.13 a share to $0.20. The new annual rate of $0.80 yields 1.7%. Petro-Canada is a buy.