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 IMPERIAL BANK OF COMMERCE $87 (Toronto symbol CM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 337.5 million; Market cap: $29.4 billion; SI Rating: Above average) provides an example. CIBC has some exposure to the U.S. subprime mortgage market, which is the source of today’s credit worries and market downturn. Growing uncertainty in the mortgage market will force CIBC to write down its U.S. investment portfolio by $190 million (after-tax) in its third fiscal quarter ended July 31, 2007. It earned $807 million or $2.27 a share in its second quarter....
CANADIAN PACIFIC RAILWAY LTD. $70 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 153.1 million; Market cap: $10.7 billion; SI Rating: Above average) transports freight over a rail network between Montreal and Vancouver. In the United States, subsidiaries connect CP’s Canadian lines to major hubs in the Midwest and Northeast. Alliances with other railways extend its reach to Mexico. CP’s revenue rose from $3.7 billion in 2002 to $4.6 billion in 2006, largely due to the expansion of trade with Asia. Profits fell from $3.06 a share (total $487.5 million) in 2002 to $2.52 a share ($401.3 million) in 2003 due to higher fuel costs....
QUAKER CHEMICAL CORP. $23 (New York symbol KWR; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 10.0 million; Market cap: $230.0 million; WSSF Rating: Average) is a small company that is prominent in a small industry. It makes lubricants and specialty chemicals that protect industrial machinery from corrosion. It sells these products mostly to steel, automotive and appliance makers in the United States and Europe. Overseas markets account for 55% of total sales. Most investors have probably never heard of Quaker, and few brokers cover it. But the company is a leader in its niche markets, and has a long history of rising sales and earnings....
CANADIAN IMPERIAL BANK OF COMMERCE $95 (Toronto symbol CM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 337.5 million; Market cap: $32.1 billion; SI Rating: Above average) has assets of $326.6 billion, which makes it the smallest of Canada’s big five banks. It operates roughly 1,100 branches in Canada. Thanks to strong gains from its credit card and mortgage businesses, CIBC’s profits before unusual items in its second fiscal quarter ended April 30, 2007 rose 18.4%, to $1.93 a share (total $657 million) from $1.63 a share ($585 million) a year earlier. CIBC’s purchase of a controlling interest in FirstCaribbean International Bank added $0.05 a share to the latest quarterly earnings. Revenue rose 8.9%, to $3.05 billion from $2.8 billion. In the past few years, CIBC has cut back its corporate lending, so it can focus on its less-risky retail business. Corporate lending now accounts for about 25% of its business, down from 35% three years ago....
BANK OF MONTREAL $69 (Toronto symbol BMO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 500.0 million; Market cap: $34.5 billion; SI Rating: Above average) is the fourth-largest bank in Canada, with $356.5 billion in assets. The bank has roughly 1,200 branches in Canada, and aims to add at least 15 branches in fiscal 2007 as part of a new restructuring plan. That should help it regain some of the business it lost to other banks in the past few years. It’s also reducing some of its back office staff. The restructuring should eventually cut its annual expenses by $300 million a year. However, problems at its commodities trading operations led to a $327 million loss on some natural gas futures contracts. Bank of Montreal is currently working to cut the risk of its trading portfolio, so further charges are possible....
TORONTO-DOMINION BANK $72 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; Shares outstanding: 719.9 million; Market cap: $51.8 billion; SI Rating: Above average) is the third-largest bank in Canada, with assets of $396.7 billion. It operates over 1,000 branches in Canada. Like Royal, TD is expanding in the United States. It recently paid $3.2 billion U.S. for the 41% of subsidiary TD Banknorth that it did not already own. Banknorth operates about 600 branches in the U.S. northeast. It has struggled lately in the face of strong competition from larger banks. TD has a long history of successfully integrating acquisitions. Owning all of Banknorth should make it easier for it to close under-performing branches and cut credit losses....
BANK OF NOVA SCOTIA $51 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; Shares outstanding: 990.0 million; Market cap: $50.5 billion; SI Rating: Above average) ranks second among Canada’s five big banks, with assets of $411.7 billion. It has over 1,000 branches and offices in Canada. In the past few years, Bank of Nova Scotia has focused on building up its operations in developing markets such as Latin America and Asia. International operations now provide 30% of its income. Demand for banking services is growing strongly in these regions as economic reforms take hold. Bank of Nova Scotia’s expertise gives it an edge over domestic banks in these countries. It lets the bank quickly improve its market share and profits. Recent overseas expansion includes the purchase of 24% of Thailand’s eighth-largest bank, and the opening of four new branches in Malaysia....
ROYAL BANK OF CANADA $56 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.3 billion; Market cap: $72.8 billion; SI Rating: Above average) is the largest of Canada’s big five banks, with total assets of $589.1 billion. It provides a wide range of financial services through over 1,300 branches in Canada, and 34 other countries. International operations account for 10% of Royal’s total revenue. Royal sees limited opportunities in Canada, so it has used acquisitions in the U.S. to fuel its growth in the past few years. Its U.S. retail banking operation, RBC Centura, now operates 270 branches in six southeast states. RBC Dain Rauscher is one of the top full-service brokerage firms in the U.S., with over 670,000 clients....
RIOCAN REAL ESTATE INVESTMENT TRUST $25 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 208.0 million; Market cap: $5.4 billion; SI Rating: Average) manages over 200 retail properties in Canada. It specializes in big-box style outdoor malls with plenty of parking space. RioCan is slowly cutting its exposure to pure retail properties. For example, it recently formed a joint venture with two seniors housing REITs to build a new mixed-use complex in Mississauga, Ontario. It’s also building a retail/residential development in Toronto. The trust recently completed the largest acquisition in its history. In February 2007, it paid $223 million for a major office/retail complex in midtown Toronto. Thanks to strong growth in the surrounding neighbourhoods, RioCan feels that the retail component of this complex (25% of total area) will become a major contributor to its future cash flow....
LOBLAW COMPANIES LTD. $50 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 274.2 million; Market cap: $13.7 billion; SI Rating: Above average) is Canada’s largest supermarket operator, with over 1,500 stores under several banners including Loblaws, No Frills and Provigo. In the past few years, Loblaw has re-modeled many of its stores to handle a wider selection of non-food merchandise, such as clothing and household goods. The company felt these moves would help it compete with Wal-Mart, which is now carrying more grocery items in its stores. As part of the plan, Loblaw also restructured its warehousing and distribution, but this is taking longer than forecast and has led to shortages at some stores. Loblaw now plans to cut its non-food merchandise, and streamline its inventory systems....