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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TRANSALTA CORP. $36 (Toronto symbol TA; Conservative Growth Portfolio, Utilities sector;Shares outstanding: 202.2 million; Market cap: $7.3 billion; SI Rating: Average) operates 50 unregulated power plants in Canada, the United States and Australia. Coal-fired plants account for about 60% of TransAlta’s production. However, the company owns two coal mines in Alberta, which helps balance its exposure to rising coal prices. Natural gas accounts for 30% of its output, and long-term supply contracts cut its price risk. The remaining 10% of TransAlta’s power comes from hydroelectric and renewable sources. Due to increasing concern over the environmental impact of burning coal and gas, TransAlta continues to expand its wind farm operations. It now plans to spend $123 million to expand capacity at its Summerview wind farm in southern Alberta by 94%. TransAlta has also earmarked $115 million for a new Alberta wind farm called Blue Trail....
FORTIS INC. $27 (Toronto symbol FTS; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 156.6 million; Market cap: $4.2 billion; SI Rating: Above average) distributes electricity to over 2 million customers in Newfoundland, Prince Edward Island, Ontario, Alberta and British Columbia. The company also owns power utilities in the United States and the Caribbean, plus hotels and commercial real estate, mainly in Atlantic Canada. Fortis prefers to operate regulated utilities, which account for 90% of its assets. That limits its growth, but gives it steady income. The company owns several generating stations, but buys much of its power from other producers under long-term agreements at regulated rates. These contracts help shield Fortis from rising fuel costs at these suppliers....
EMERA INC. $23 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 111.6 million; Market cap: $2.6 billion; SI Rating: Average) generates and distributes electricity to over 600,000 customers in Nova Scotia and Bangor, Maine. Emera uses coal to generate nearly 70% of its electricity. Oil and natural gas supply 15% of its output, while wind and power purchased from other suppliers provides the remaining 15%. Power regulators in Nova Scotia recently approved a new fuel adjustment formula that will make it easier for Emera to cover its rising fuel costs....
ENCANA CORP. $93 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 750.0 million; Market cap: $69.8 billion; SI Rating: Average) is a leading North American producer of natural gas and oil. The company took its current form in April 2002 through the merger of PanCanadian Energy Corp. and Alberta Energy Corp. Soon after, it sold most of its conventional properties to focus on what it calls “key resource plays”, including early-stage natural gas fields and oil sands. We thought this was a great idea. These assets cost more to develop, at least initially, but can last decades longer than conventional properties. Thanks to this strategy, plus higher oil and gas prices, EnCana’s earnings jumped from $1.44 a share (total $1.4 billion) in 2003 to $5.36 a share ($4.1 billion) in 2007 (all amounts except share price and market cap in U.S. dollars). Cash flow per share rose from $3.90 in 2003 to $11.06 in 2007. Revenue grew from $10.2 billion in 2003 to $21.5 billion in 2007....
DUNDEE CORP. $14 (Toronto symbol DC.A; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 75.6 million; Market cap: $1.1 billion; SI Rating: Average) is a holding company with subsidiaries in three main areas: wealth management, real estate and resources. Its main asset is its 45% stake (59% voting interest) in DundeeWealth Inc., which offers wealth management services and owns the Dynamic family of mutual funds. Dundee recently reorganized its wealth management operations. It sold Dundee Bank of Canada, a Schedule I Chartered Bank, to Bank of Nova Scotia for $260 million. Scotiabank also purchased $348.3 million of non-voting shares in DundeeWealth, which gave it an 18% economic interest. Thanks mainly to gains from asset sales, Dundee’s earnings from continuing operations in 2007 jumped to $3.49 a share (total $277.6 million) from $1.19 a share ($98.6 million) in 2006. Revenue rose 27.3%, to $1.4 billion from $1.1 billion. The market value of the company’s investment portfolio, excluding its consolidated subsidiaries, was $5.33 per Dundee share at December 31, 2007....
HOME CAPITAL GROUP INC. $41 (Toronto symbol HCG; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 34.5 million; Market cap: $1.4 billion; SI Rating: Extra risk) is the parent company of Home Trust Company, a federally regulated trust company that specializes in residential first mortgages to small business owners, the self-employed and others who don’t meet the stricter criteria of larger, traditional lenders. The stock fell to $30 in January 2008, mostly due to the ongoing writedowns of U.S. subprime residential mortgages by other lenders. However, Home Capital has no exposure to the U.S. Its conservative lending policies have also helped keep its credit losses down. In the three months ended March 31, 2008, earnings rose 18.0%, to $0.72 a share from $0.61 a year earlier. If you exclude a loss on the sale of an investment, earnings in the latest quarter would have grown 27.9%, to $0.78 a share. Revenue rose 30.7%, to $106.8 million from $81.7 million....
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....