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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CANADIAN UTILITIES LTD. (Toronto symbols CU $48 (Class A) and CU.X $47 (Class B); Income Portfolio, Utilities sector; Shares outstanding: 125.4 million; Market cap: $6.0 billion; SI Rating: Above average) is a leading distributor of natural gas and electricity in Alberta. It has over 1 million customers in nearly 300 communities. The company also operates independent power plants in other parts of Canada, the UK and Australia. ATCO Ltd. controls about 74% of the company’s class B voting common shares. Among Canadian Utilities’ overseas investments is a 25.5% stake in the Barking power plant in London, UK. Due to the recent failure of a steam turbine, the plant will operate at 60% of capacity for the next 45 days. The outage will cut Canadian Utilities’ earnings in the fourth quarter of 2007 by $5 million to $10 million....
TRANSCANADA CORP. $39 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 540 million; Market cap: $21.1 billion; SI Rating: Above average) operates a 59,000-km network of natural gas pipelines in Canada and the United States. This business supplies 70% of its profit. The remaining 30% comes from its electrical power operations. TransCanada aims to cut its reliance on its regulated pipeline business with new growth projects. These include the Keystone pipeline, which will transport crude oil from Alberta’s oil sands to the U.S. Midwest. Initial deliveries should begin in late 2009. The company recently agreed to sell half of Keystone to U.S.-based oil giant Conoco- Phillips for an undisclosed sum. TransCanada had earlier granted ConocoPhillips this option as part of a long-term shipping agreement. That will cut the risk of this project, as well as its projected cost of $3 billion....
IGM FINANCIAL INC. $42 (Toronto symbol IGM; Conservative Growth Portfolio; Finance sector; Shares outstanding: 264.4 million; Market cap: $11.1 billion; SI Rating: Above average) is Canada’s largest mutual fund company, with $117.6 billion in assets under management. Power Corp. controls 56% of IGM. The company has three main divisions. Investors Group sells funds through its own network of over 4,000 financial advisors. Mackenzie Financial sells its funds through independent brokers. IGM also owns 74.5% of IPC Financial, whose 540 advisors provide wealth management services. Unlike Great- West, IGM has few operations outside of Canada. IGM’s revenue rose from $1.9 billion in 2002 to $2.6 billion in 2006. Revenue probably reached $2.9 billion in 2007. Earnings before unusual items grew from $1.85 a share (total $491.1 million) in 2002 to $2.85 a share ($763.0 million) in 2006. Earnings in 2007 likely grew to $3.17 a share....
GREAT-WEST LIFECO INC. $32 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 892.5 million; Market cap: $28.6 billion; SI Rating: Above average) is Canada’s largest insurance company, with over $400 billion in assets under administration. Power Corp. controls 70% of Great-West’s shares. Great-West sells life insurance and health insurance, directly and through brokers, to groups and individuals under the Great-West, London Life and Canada Life banners. Other services include retirement planning and wealth management. It also provides administrative services to pension fund managers. Great-West’s revenues rose from $16.7 billion in 2002 to $27.3 billion in 2006, mainly due to its 2003 purchase of rival Canada Life. Earnings grew from $1.27 a share (total $931 million) in 2002 to $2.10 a share ($1.9 billion) in 2006. Great-West likely earned $2.45 a share in 2007....
MOTOROLA INC. $10 (New York symbol MOT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 2.3 billion; Market cap: $23.0 billion; WSSF Rating: Above average) plans to introduce several new products to cut its reliance on cellphones, which now account for about half of its sales. For example, it plans to launch a hand-held bar code scanner for retail stores that wirelessly accesses product and inventory information. Motorola is also working on a device that shoppers can use to scan their own purchases inside supermarkets. Billionaire investor Carl Icahn, who owns about 3% of Motorola’s shares, wants the company to unlock value by spinning off its non-cellphone divisions. Promising new products such as these scanners enhance the appeal of these operations....
ROYAL BANK OF CANADA $49 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.3 billion; Market cap: $63.7 billion; SI Rating: Above average) is Canada’s largest bank, with assets of $600.3 billion. Royal has built up its operations in the United States in the past few years, mainly through acquisitions. The U.S. now accounts for about 15% of its total earnings. Despite its sizable American operations, Royal does not originate subprime mortgages. Securities backed by subprime mortgages and other risky loans account for less than 1% of its assets....
TORONTO-DOMINION BANK $66 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; Shares outstanding: 717.8 million; Market cap: $47.4 billion; SI Rating: Above average) is Canada’s second-largest bank, with assets of $422.1 billion. In the fiscal year ended October 31, 2007, TD’s earnings rose 23.4%, to $5.75 a share (total $4.2 billion) from $4.66 a share ($3.35 billion) in 2006. These figures exclude several unusual items, including a $135 million after-tax gain on the Visa restructuring. Revenue rose 8.3%, to $14.3 billion from $13.2 billion. Despite its expanding operations in the United States, which now supply 8% of its earnings, TD’s exposure to U.S. subprime mortgages is minimal. TD’s bad loans remained unchanged in 2007 at 0.2% of total loans. It also cut its efficiency ratio to 59.6% from 62.4%....
BANK OF NOVA SCOTIA $47 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; Shares outstanding: 984.0 million; Market cap: $46.2 billion; SI Rating: Above average) is the third-largest Canadian bank, with assets of $411.5 billion. Bank of Nova Scotia prefers to focus on developing markets, such as Asia and Latin America, for new growth. These areas give it a better opportunity to quickly improve its market share than more established countries like the U.S. The bank wrote down $191 million (pre-tax) worth of asset-backed securities in fiscal 2007. However, this was more than offset by a $202 million (pre-tax) gain from the Visa restructuring. That helped earnings grow to $4.01 a share (total $4.0 billion), up 13.0% from $3.55 a share ($3.6 billion) in 2006. Revenue rose 11.6%, to $12.5 billion from $11.2 billion....
BANK OF MONTREAL $57 (Toronto symbol BMO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 498.6 million; Market cap: $28.4 billion; SI Rating: Above average) is the fourth-largest Canadian bank, with $366.5 billion in assets. Bank of Montreal owns Harris Bank, a major bank in Chicago. Harris’s conservative lending policies have limited Bank of Montreal’s exposure to the problems in the U.S. mortgage market. However, Bank of Montreal still had to write down the value of asset-backed securities it holds by $211 million (after-tax) in fiscal 2007. Another problem for Bank of Montreal is its commodity trading operations, which lost $440 million (after-tax) on natural gas futures contracts. The bank is making progress cutting the risk of its trading operations, but further losses are possible....
CANADIAN IMPERIAL BANK OF COMMERCE $69 (Toronto symbol CM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 335.0 million; Market cap: $23.1 billion; SI Rating: Above average) is Canada’s fifth-largest bank, with assets of $342.2 billion. CIBC has the most exposure to the U.S. subprime mortgage market among the top five Canadian banks. It has already written down its holdings by about $1 billion. CIBC now faces a further $2 billion charge due to growing uncertainty over hedges it purchased from troubled U.S. bond insurer ACA Financial Guaranty Corp. to protect it from subprime losses. In 2005, CIBC paid $2.5 billion (after-tax) to settle Enron-related claims. If you exclude writedowns and a gain on the restructuring of the Visa credit card system, CIBC’s earnings in the year ended October 31, 2007 rose 27.3%, to $9.24 a share (total $3.1 billion) from $7.26 a share ($2.5 billion) in 2006. Revenue grew 6.6%, to $12.1 billion from $11.35 billion, due to strong growth at its retail banking division plus an acquisition....