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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METRO INC. $23 (Toronto symbol MRU.A Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 113.1 million; Market cap: $2.6 billion; SI Rating: Extra risk) operates 655 grocery stores in Quebec and Ontario. Metro is still absorbing its 2005 purchase of over 240 stores in Ontario from A&P Canada. In the first phase of its integration plan, Metro has saved $90 million by combining the purchasing power of the two chains. That’s roughly 1.5 times the $58.3 million or $0.51 a share that Metro earned in its first fiscal quarter ended December 22, 2007. Metro’s operating margin in the latest quarter fell to 5.45% from 6.15% a year earlier. That’s mainly due to costs of consolidating warehouses in Quebec and installing a new computer system in Ontario. Margins should improve as Metro realizes the benefits of the second phase of the A&P integration, which includes combining certain banners and private label brands....
TRANSCONTINENTAL INC. $15 (Toronto symbol TCL.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 83.7 million; Market cap: $1.3 billion; SI Rating: Average) is a leading provider of direct marketing services, such as direct mail and client database management. This business supplies 45% of its revenue. It also offers commercial printing services (30% of revenue), and publishes over 180 newspapers and 35 magazines (25% of revenue). The United States accounts for 25% of its revenue. Transcontinental continues to spend heavily upgrading its printing plants, including $80 million in two plants in Montreal. This will give customers more flexibility over colour and printing materials, as well as cut Transcontinental’s operating costs. These investments are also helping Transcontinental win more outsourcing contracts from publishers. It already has long-term deals to print The Globe and Mail and The New York Times....
THE THOMSON CORP. $36 (Toronto symbol TOC; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 638.9 million; Market cap: $23.0 billion; SI Rating: Above average) provides specialized information to users in the legal, accounting, financial, scientific and healthcare professions. Over 80% of Thomson’s revenue comes from electronic products, such as software and databases. As well, 80% comes from subscriptions, which gives its predictable revenue streams. In 2007, Thomson earned $1.1 billion before one-time items, up 28.4% from $857 million in 2007 (all amounts except share price and market cap in U.S. dollars). Per-share earnings rose 27.1%, to $1.69 from $1.33. Revenue grew 10.6%, to $7.3 billion from $6.6 billion. If you disregard acquisitions, revenue rose 6%. Thomson aims to complete its merger with UK-based Reuters Group plc in mid-April. The deal will let Thomson take advantage of Reuters operations to expand sales in Europe and Asia and cut its reliance on North America, which accounts for 83% of its revenue. The company can also market Reuters products to its own customers....
TORSTAR CORP. $17 (Toronto symbol TS.B; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 78.7 million; Market cap: $1.3 billion; SI Rating: Above average) publishes The Toronto Star, Canada’s largest daily newspaper. It also publishes other daily and community newspapers in Southern Ontario. Newspapers supply 70% of Torstar’s profit and revenue. The remaining 30% comes from wholly owned subsidiary Harlequin Enterprises Ltd., which is the world’s largest publisher of romance novels. Torstar has expanded its Internet properties in the past few years, which helps cut its exposure to declining newspaper circulation. As well, the company bought 20% of CTVglobemedia Inc. This business owns the CTV Television Network, specialty TV channels, radio stations and The Globe and Mail newspaper. These assets help broaden Torstar’s geographic exposure....
TECK COMINCO LTD. $43 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 441.9 million; Market cap: $19.0 billion; SI Rating: Average) is the world’s top producer of zinc, which accounts for 35% of Teck’s revenue. To cut its dependence on zinc, Teck has diversified in the past few years through acquisitions. The biggest was its $4.1 billion cash-and-stock purchase of Aur Resources in August 2007. Aur owns the Duck Pond copper mine in Newfoundland, plus two other mines in Chile. Copper now supplies 30% of Teck’s revenue. Teck’s other products include coal (20% of revenue), as well as gold, silver, lead and other metals (15%). Thanks mainly to strong demand and rising prices for metals, Teck’s revenue jumped from $2.4 billion in 2003 to $6.5 billion in 2006. Revenue slipped to $6.4 billion in 2007. Earnings rose from $0.28 a share (total $103.0 million) in 2003 to $5.26 a share ($2.2 billion) in 2006. Earnings in 2007 fell to $4.06 a share ($1.8 billion), mainly due to lower zinc and coal prices. The rising Canadian dollar also weighed on Teck’s 2007 earnings. That’s because Teck sells its products in U.S. dollars, but most of its expenses are in Canadian dollars. Cash flow per share shot up from $0.86 in 2003 to $5.76 in 2006, but fell to $4.64 in 2007....
TELUS CORP. (Toronto symbols T $57 and T.A $56; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 337.9 million; Market cap: $19.3 billion; SI Rating: Above average) is the second-largest provider of telecommunication services in Canada, after BCE Inc. It has over 4.5 million regular telephone customers and 1.1 million Internet subscribers in British Columbia, Alberta and parts of Quebec. These operations account for about 55% of Telus’s revenue and 50% of its earnings. The rest comes from Telus’s wireless business, which has 5.1 million customers nationwide. Telus’s revenue grew from $7.0 billion in 2002 to $8.7 billion in 2006, or 5.6% compounded annually. The company lost $0.72 a share (total $227.1 million) in 2002, due to restructuring costs following the Clearnet acquisition. But thanks to strong demand for wireless service, Telus’s profits grew from $0.93 a share ($329.8 million) in 2003 to $3.23 a share ($1.1 billion) in 2006. Cash flow per share more than doubled, from $3.88 in 2002 to $8.78 in 2006....
TERANET INCOME FUND $9.50 (Toronto symbol TF.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 155.0 million; Market cap: $1.5 billion; SI Rating: Speculative) manages Ontario’s electronic land registration system. Over 80,000 customers use its proprietary, software application, Teraview, to conduct electronic real estate registrations as well as title and writ searches. Teranet has an exclusive license from the Ontario government to operate the land registry system until March 31, 2017. Teranet’s units began trading on June 16, 2006 after the fund completed an initial public offering at $10.00 a unit. The fund pays distributions of $0.065 a month. The annual rate of $0.78 yields 8.2%. Teranet distributed 70% of its cash flow to unitholders in 2007....
PRECISION DRILLING TRUST $21 (Toronto symbol PD.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 125.8 million; Market cap: $2.6 billion; SI Rating: Extra risk) earned $2.73 a unit in 2007, down 40.1% from $4.56 in 2006. Cash flow per share fell 35.4%, to $3.34 from $5.17, while revenue fell 28.6%, to $1.0 billion from $1.4 billion. Weaker natural gas prices and higher royalty payments in Alberta hurt demand for its drilling rigs. Precision plans to keep expanding in the United States, which now accounts for roughly 8% of its revenue. Precision’s new rigs are more efficient than regular models, and should help Precision win contracts away from U.S. operators of older rigs. The trust also plans to expand internationally in 2008. Precision pays regular monthly distributions of $0.13 a unit. That gives the units a current yield of 7.4%....
THE WESTAIM CORP. $0.26 (Toronto symbol WED; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 94.0 million; Market cap: $24.4 million; SI Rating: Speculative) owns 74.5% of Nucryst Pharmaceuticals Corp. (Toronto symbol NCS), which makes medical products that prevent infection in burns and wounds. Based on current prices, this investment is worth $0.23 per Westaim share. A new development deal with UK-based Smith & Nephew plc should expand Nucryst’s earnings in 2008 and beyond. Westaim itself is still debt free, and had cash of $0.33 a share at December 31, 2007. Westaim is still a hold, but only for highly aggressive investors.
CANADIAN PACIFIC RAILWAY LTD. $67 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 153.3 million;Market cap: $10.3 billion; SI Rating: Above average) recently acquired 40 new locomotives, but mechanical problems have hurt the reliability of its fleet. Bad weather, rising fuel costs and an unfavourable regulatory ruling could also put pressure on CP’s first quarter earnings. Despite these setbacks, CP’s earnings in 2008 should still grow about 9% to $4.72 a share. The stock trades at 14.2 times that figure. CP Rail is a buy.