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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BOMBARDIER INC. (Toronto symbols BBD.A $6.29 and BBD.B $6.26; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $10.6 billion; SI Rating: Extra risk) is the world’s third-largest maker of commercial aircraft, after Boeing and Airbus. It specializes in small business jets, and regional jets that carry around 100 passengers. The company also makes passenger railcars. In its second fiscal quarter ended July 31, 2007, Bombardier earned $0.05 a share, up 66.7% from $0.03 a year earlier (all amounts except share price and market cap in U.S. funds). The most recent quarterly figure excludes a one-time writedown of its investment in a group that’s refurbishing the London, UK subway system. Strong demand for business jets and railcars, particularly in China and Russia, expanded sales by 14.3%, to $4.0 billion from $3.5 billion. Bombardier should earn $0.21 U.S. a share in 2007, and the stock trades at 28.8 times that estimate. That’s reasonable in light of its improving prospects....
BELL ALIANT REGIONAL COMMUNICATIONS INCOME FUND $32 (Toronto symbol BA.UN; Conservative Growth Portfolio, Utilities sector; Units outstanding: 130.8 million; Market cap: $4.2 billion; SI Rating: Above average) is the main provider of telephone services in Atlantic Canada. It also serves rural parts of Ontario and Quebec. BCE Inc. controls 43.4% of Bell Aliant. As part of the deal that created Bell Aliant, the fund transferred the bulk of its wireless business to BCE. Without these operations, the fund now aims to spur growth by expanding the availability and capacity of its high-speed Internet service. Just 20% of Bell Aliant’s customers use its high-speed Internet service, so there’s plenty of room to grow....
MANITOBA TELECOM SERVICES INC. $49 (Toronto symbol MBT; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 64.6 million; Market cap; $3.2 billion; SI Rating: Average) is Manitoba’s main provider of local, long distance and wireless telephone service, with over 90% of the market. Other services include Internet access and a digital TV service. It also owns Allstream, a national provider of communication services to businesses. Allstream accounts for roughly 55% of Manitoba Tel’s revenue, but just 40% of its profit. That’s because the business telecom market is more competitive than Manitoba Tel’s traditional operations. But Allstream’s plan to focus on small businesses that its bigger competitors tend to ignore should help it improve its roughly 10% market share....
TELUS CORP. (Toronto symbols T $56 and T.A $54; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 331.7 million; Market cap: $18.5 billion; SI Rating: Above average) provides local and long distance telephone service in British Columbia, Alberta and parts of Quebec, and wireless service across Canada. A big part of the company’s success in the past few years is its wireless operations, which now account for 40% of its total revenue. Telus prefers to focus on long-term customers, which cuts the need for expensive promotions such as free phones. That has helped keep its wireless profit margins high compared to its main competitors (BCE and Rogers). Telus also tends to hang on to its customers longer....
TIM HORTONS INC. $35 (Toronto symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 188.8 million; Market cap: $6.6 billion; SI Rating: Extra risk) operates 2,733 coffee-and-donut shops in Canada, and 345 in the United States. Franchisees operate 97.5% of its stores. Much of the company’s growth comes from a steady stream of new products, and innovative promotions. Healthier menu items such as fresh sandwiches, soups and salads have also helped it attract customers who avoid donuts. In the three months ended July 1, 2007, earnings fell 11.9% to $67.2 million from $76.3 million a year earlier. Write-offs related to the company’s initial public offering gave it an unusually low tax rate of 19.8% in the year-earlier quarter. The tax rate in the latest quarter grew to a more normal 33.8%. Per-share earnings fell 7.7%, to $0.36 from $0.39, due to fewer shares outstanding....
MAPLE LEAF FOODS INC. $15 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 128.6 million; Market cap: $1.9 billion; SI Rating: Average) makes fresh and frozen meat products, mainly under the Maple Leaf and Schneiders brands. It also owns 88.0% of Canada Bread Company (see box at right). The company is currently restructuring its operations to focus on value-added products, which generate higher profits than fresh meat. Consequently, it recently closed two pork processing plants and will close a third later this year. In the second quarter of 2007, Maple Leaf’s revenue fell 2.9%, to $1.32 billion from $1.36 billion a year earlier. However, earnings from continuing operations and excluding restructuring costs grew 8.3%, to $0.13 a share (total $52.7 million) from $0.12 a share ($46.8 million)....
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....