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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PENGROWTH ENERGY TRUST $20 (Toronto symbol PGF.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 247.9 million; Market cap: $5.0 billion; SI Rating: Average) is one of North America’s largest energy royalty trusts. Pengrowth produces oil and natural gas from properties in Alberta, British Columbia and Saskatchewan. It also owns 8.4% of the Sable Offshore Energy Project, which extracts natural gas from several fields south of Nova Scotia. Natural gas accounts for roughly 60% of Pengrowth’s production, while oil supplies the remaining 40%. Pengrowth focuses mainly on high quality, mature properties that give it plenty of steady cash flows. In the past three years, it has acquired properties that have increased its reserves by 45% and its production by 63%. Based on current production levels, Pengrowth’s reserves should last at least 10 years. Pengrowth uses hedging contracts to lock-in selling prices and stabilize its cash flows. Due to the sharp rise in oil prices in the past few months, Pengrowth had to write down the value of these contracts. Unrealized foreign exchange losses have also weighed on its profits....
PRECISION DRILLING TRUST $28 (Toronto symbol PD.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 125.8 million; Market cap: $3.5 billion; SI Rating: Extra risk) is the largest contract driller in Canada. It operates 231 drilling rigs, 223 well servicing rigs and a rental and production services division. It also operates 14 drilling rigs in the United States, and one rig in Latin America. In the past year, lower natural gas prices and increasing royalty payments have hurt demand for Precision’s rigs and services in its core markets in Western Canada. In the three months ended March 31, 2008, Canadian drilling rig utilization fell to 50.0% from 53.3% a year earlier, and prices fell 11%. However, that’s partly because Precision continues to avoid low-margin contracts. Earnings in the first quarter fell 33.3%, to $0.84 a unit from $1.26. Cash flow per unit declined 66.3%, to $0.28 from $0.83, while revenue fell 16.5%, to $342.7 million from $410.5 million....
FORDING CANADIAN COAL TRUST $71 (Toronto symbol FDG.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 148.7 million; Market cap: $10.6 billion; SI Rating: Average) is one of the world’s leading producers of metallurgical coal, a key ingredient in steelmaking. It came into existence as part of the break-up in October 2001 of the old Canadian Pacific holding company, rather than a new issue from a broker. Fording’s reserves should last 25 years at current production rates. Fording’s main asset is its 60% stake in the Elk Valley Coal Partnership, which operates six coal mines in British Columbia and Alberta. Teck Cominco owns the remaining 40% of Elk Valley, and operates the partnership. Teck also owns 19.95% of Fording’s units, which gives it an effective 52% stake in Elk Valley. In the first quarter of 2008, Fording’s earnings before unusual items fell 45.8%, to $0.26 a unit from $0.48 a year earlier. Cash flow per share fell 28.3%, to $0.38 from $0.53. Sales fell 5.3%, to $332.0 million from $350.5 million. Lower coal prices offset a 22% jump in production. Fording sells its coal in U.S. dollars, so it’s also vulnerable to the rising Canadian dollar....
ENCANA CORP. $91 (Toronto symbol ECA)differs from the typical spinoff in that the two portions are of comparable size. More often, the spinoff company is much smaller than the parent. But the principle is the same. The management is breaking up the company into two or more parts, despite the fact that this works against management’s interests, by reducing the assets to manage. Good managers do this for two reasons. First, they aim to serve shareholders’ interests. Second, the two companies generally experience an increase in stock values and/or a speedup in growth, which generally lead to higher pay for management. Of course managers sometimes negate the value of the spinoff or corporate breakup by taking huge bonuses for themselves, for arranging it. But that’s not happening at EnCana....
RioCan Real Estate Investment Trust $22 (Toronto symbol REI.UN Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 212.0 million; Market cap: $4.7 billion; SI Rating: Average) is Canada’s largest real estate investment trust. It owns 214 retail properties, including 12 under development, comprising an aggregate of almost 55 million square feet. RioCan specializes in “New Format” shopping centres. These are large, outdoor malls made up of “Big Box” stores in the suburbs of larger cities. They feature plenty of room for parking and future expansion. RioCan also operates smaller outdoor shopping centres, as well as enclosed malls in urban areas. The trust’s revenue rose from $474.5 million in 2003 to $719.9 million in 2007. Its earnings fell from $1.03 a unit (total $174.4 million) in 2003 to $0.69 a unit ($134.9 million) in 2005, but rose to $0.83 a unit ($163.8 million) in 2006. In 2007, a non-cash charge of $144 million related to changes in the way Ottawa taxes REITs cut earnings to $0.16 a unit ($32.4 million). If you exclude this adjustment, RioCan would have earned$0.85 a unit in 2007. Cash flow per unit grew from $1.26 in 2003 to $1.51 in 2007....
NOVA CHEMICALS CORP. $24 (Toronto symbol NCX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 83.1 million; Market cap: $2.0 billion; SI Rating: Extra risk) makes industrial plastics that manufacturers use to make a wide variety of products including auto parts, construction materials and packaging. Nova’s plant in Joffe, Alberta is the world’s largest producer of ethylene and polyethylene, and benefits from its proximity to Alberta’s large oil and gas reserves. The stock peaked at $43.70 in July 2007, but has dropped since due to fears that a slowing economy in the United States would hurt demand for its products. The U.S. accounts for roughly 45% of sales. Nova’s cyclical operations and exposure to volatile oil and gas prices adds risk. However, last year’s merger of its money-losing foam cup operations into a 50:50 joint venture cuts its costs....
AGRIUM INC. $72 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 158.0 million; Market cap: $11.4 billion; SI Rating: Average) is a leading producer of fertilizers and crop protection products. The company uses natural gas to make ammonia, the basic ingredient in fertilizers. Most of Agrium’s facilities are near large gas suppliers in Alberta, which helps keep its input costs down. Agrium will soon close its fertilizer plant in Kenai, Alaska, since it couldn’t find a reliable source of natural gas for the plant. The company looked into a plan to convert coal to natural gas. However, Agrium feels the project’s $2 billion U.S. cost is too expensive. It earned $3.25 U.S. a share (total $441 million U.S.) in 2007. Requests for more information from U.S. competition regulators have delayed Agrium’s planned $2.7 billion U.S. takeover of U.S.-based agricultural products distributor UAP Holding Corp. The addition of UAP will make Agrium the biggest agriculture retailer in North America. Selling seeds and other products to farmers also gives Agrium steadier revenue streams than bulk fertilizer sales....
GENNUM CORP. $9.05 (Toronto symbol GND; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.6 million; Market cap: $322.2 million; SI Rating: Above average) makes equipment that lets broadcasters store, manipulate and transport video signals without losing picture quality. This business accounts for 75% of Gennum’s total revenue. The company also makes chips for computer networks. Gennum recently completed a major realignment of its operations. It sold its slow-growing hearing aid and headset businesses, as well as part of its video chip operations. The company used the proceeds of around $25 million U.S. to finance its $25.3 million U.S. purchase of privately held Snowbush Microelectronics, a Toronto-based developer of technologies that help chip-makers improve the speed and reliability of data transmissions inside computers and other electronic devices. Snowbush’s expertise will help Gennum design better high-speed data and video chips....
NORTEL NETWORKS CORP. $7.26 (Toronto symbol NT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 437.2 million; Market cap: $3.2 billion; SI Rating: Speculative) is one of the world’s largest makers of telecommunications equipment. The company sells its products mainly to telephone companies, cable TV operators and large organizations. The telecom industry is highly competitive, and recent mergers among telecom equipment suppliers have driven down prices. The slowing economy has also prompted telephone companies and corporations to maintain their current networks instead of investing in new equipment. In 2007, Nortel lost $957 million or $1.98 a share (all amounts except share price and market cap in U.S. dollars). That figure included a $1.1 billion (pre-tax) non-cash writedown of a deferred tax asset. Excluding all one-time items, Nortel earned $0.37 a share in 2007. The company earned $28 million or $0.06 a share in 2006....
CGI GROUP INC. $12 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 323.6 million; Market cap: $3.9 billion; SI Rating: Speculative) is one of the largest independent information technology and business process services firms in North America. CGI provides day-to-day maintenance and improvement for clients’ business applications, and integrates and customizes technologies and software applications. The company also manages back-office business processes and transactions. North America accounts for over 90% of its revenue. CGI is a former subsidiary of BCE Inc., and BCE is its largest client at roughly 14% of total revenue....