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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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....
HOME CAPITAL GROUP INC. $38 (Toronto symbol HCG; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 34.5 million; Market cap: $1.3 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. Home Trust’s mortgage lending is primarily funded by retail deposits. Home Trust takes deposits in the form of short-term deposits, guaranteed investment certificates, registered retirement savings plans and registered retirement income funds. The trust earns money on the spread between the interest it receives from homeowners, and the interest it pays out to the buyers of these securities. The company operates just six branches in Ontario, Quebec, Nova Scotia, Alberta and British Columbia, so it gets most of its business through independent deposit and mortgage brokers....
TOYOTA MOTOR CORP. ADRs $106 (New York symbol TM; Conservative Growth Portfolio, Manufacturing & Industry sector; ADR’s outstanding: 1.6 billion; Market cap: $169.6 billion; WSSF Rating: Above average) reported that its North American sales in the six months ended September 30, 2007 rose 2.3%, due to strong demand for the new Tundra pickup truck and Prius hybrid compact. Sales grew 18% in Japan, and 8% in Europe. Consequently, Toyota’s six-month revenue rose 9.3%, to $101.0 billion from $92.4 billion a year earlier. Earnings improved 18.8%, to $4.86 per ADR from $4.09 per ADR. (Each Toyota American Depository Share represents two of Toyota’s common shares.) North America accounts for about 40% of Toyota’s sales. Toyota’s sales in North America will probably slow in the second half of 2008. Florida and California account for 25% of its U.S. sales, so falling housing prices in these markets could force Toyota to rely on special incentives to keep inventories down. However, rising sales in developing countries will help offset slowing North American sales. For example, Toyota currently has 5% of China’s car market, but it aims to double its market share by 2010....
CANADIAN TIRE CORP. $73 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.6 million; Market cap: $6.0 billion; SI Rating: Above average) is one of Canada’s leading retailers. Its 468 Canadian Tire stores sell a unique mix of automotive, household and sporting goods. The company also operates smaller retail chains Mark’s Work Wearhouse (casual clothing) and PartSource (auto parts), as well as 265 gas stations. In the mid-1990s, Canadian Tire began a major overhaul of its stores to make them more friendly to shoppers, including wider aisles and better signage and lighting. This helped it compete with big U.S. retailers such as Wal-Mart and Home Depot....
CANADIAN PACIFIC RAILWAY LTD. $66 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 153.2 million; Market cap: $10.1 billion; SI Rating: Average) has also run into problems with its plan to buy a U.S. railway. In September 2007, it agreed to pay $1.48 billion U.S. for Dakota, Minnesota & Eastern Railroad Corp. (DM&E), which operates a 4,000-km rail network in eight Midwestern states. DM&E mainly transports agricultural products, coal and ethanol to key ports such as Chicago and Minneapolis. CP also plans to spend $300 million U.S. to upgrade DM&E’s tracks and railcars. This is a big investment for CP, which earned $603.9 million (Canadian) or $3.87 a share in the first nine months of 2007. Like CN, this acquisition also faces local opposition. While this will prolong the regulatory review process, CP will likely win approval for the takeover....