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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FINNING INTERNATIONAL INC. $54 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 89.5 million; Market cap: $4.8 billion; SI Rating: Above average) is one of the world’s largest dealers of heavy equipment made by Caterpillar Inc., such as tractors, bulldozers, pavers and trucks. Major customers include the mining, forest products and construction industries. Revenue grew at a compound annual rate of 11.8%, from $3.2 billion in 2002 to $5.0 billion in 2006. Most of that growth is due to higher commodity prices, which have spurred strong demand for heavy equipment from mining and oil exploration firms. Profits from continuing operations were $1.68 a share (total $132.3 million) in 2002 and $1.68 a share ($132.0 million) in 2003, but rose to $2.27 a share ($240.7 million) in 2006. (These per-share figures do not reflect a 2-for-1 stock split planned for May 2007.) Cash flow per share rose from $5.99 in 2002 to $6.55 in 2003. It fell to $6.37 in 2004, and to $5.95 in 2005, but grew to $6.71 in 2006....
CANADIAN UTILITIES LTD. (Toronto symbols CU $42 (Class A) and CU.X $42 (Class B); Income Portfolio, Utilities sector; Shares outstanding: 125.4 million; Market cap: $5.3 billion; SI Rating: Above average) is a leading supplier of natural gas and electricity in Alberta. It has 970,000 gas customers, and 216,000 electricity customers. It also operates power plants in other parts of Canada, as well as in the UK and Australia. ATCO Ltd. controls about 74% of the company’s class B voting common shares. In the past few years, Canadian Utilities has sold many of its unregulated operations. That hurts its growth prospects, but also limits its overall risk. It now gets about half of its revenue and income from regulated operations....
EMERA INC. $20 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 110.9 million; Market cap: $2.2 billion; SI Rating: Average) is the main supplier of electrical power in Nova Scotia, with 470,000 customers. It also provides power to 115,000 customers in Bangor, Maine. Right now, the company gets over 80% of its income from its main Nova Scotia Power subsidiary. Through acquisitions and investments, Emera eventually aims to cut this to 65%. For example, the company plans to invest $350 million in a new pipeline that will transport natural gas from a planned liquefied natural gas terminal in Saint John, New Brunswick to markets in Canada and the Northeastern United States. Emera also recently paid $22 million U.S. for a 19% stake in the main electrical utility on the Caribbean island of St. Lucia....
FORTIS INC. $27 (Toronto symbol FTS; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 104.9 million; Market cap: $2.8 billion; SI Rating: Above average) operates electrical power plants in Atlantic Canada, Ontario, Alberta and British Columbia. It also invests in power utilities in the United States and the Caribbean region, and owns hotels and commercial real estate. In 2006, the company earned $1.37 a share (total $148.8 million), up 10.5% from $1.24 a share ($137.1 million) in 2005 (the 2005 earnings included an unusual $7.9 million after-tax gain). Most of the higher earnings came from strong growth at its regulated power plants in Western Canada and the Caribbean. Revenue rose 2.1%, to $1.47 billion from $1.44 billion. In the past few years, Fortis has used acquisitions to geographically diversify its operations. Its latest purchase is the regulated gas distribution business of Terasen Inc. (formerly called BC Gas), which supplies gas to over 900,000 customers in British Columbia....
ENCANA CORP. $48 (New York symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 772.0 million; Market cap: $37.1 billion; WSSF Rating: Average) is a leading Canadian energy company. Natural gas accounts for 80% of its production, while oil supplies the remaining 20%. In the three months ended December 31, 2006, lower gas prices cut EnCana’s profit 42.5%, to $0.84 a share from $1.46 a year earlier. These figures exclude unusual items such as gains on the sale of assets and hedging gains. Cash flow per share fell 24.3%, to $2.18 from $2.88, while revenue fell 37.3%, to $3.7 billion from $5.9 billion. In the past few years, EnCana has sold its overseas assets to focus on unconventional properties in North America, such as early-stage gas fields and the oil sands in Alberta....
CANADIAN TIRE CORP. $70 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer Growth Portfolio; Shares outstanding: 81.7 million; Market cap: $5.7 billion; SI Rating: Above average) and its associated dealers operate 465 stores that specialize in automotive equipment, home improvement and sporting goods. The group also operates 260 gas stations, 60 auto parts stores and 330 Mark’s Work Wearhouse casual clothing stores. Canadian Tire saw the threat from Wal-Mart in the mid-1990s, and began to replace its older stores with bigger ones. It also developed a new store format it calls “Concept 20/20", which tends to generate higher customer traffic and sales than its regular stores. About 20% of Canadian Tire’s stores now use this format. Like Loblaw and Sobeys, Canadian Tire has also overhauled its distribution networks and computerized its inventory control systems. Ongoing savings from these investments will help Canadian Tire stay competitive....
SOBEYS INC. $42 (Toronto symbol SBY; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 65.5 million; Market cap: $2.8 billion; SI Rating: Average) is Canada’s secondlargest grocery retailer, after Loblaw. It operates around 1,300 stores, mainly in Central and Atlantic Canada. Major banners include Sobeys, Foodland, IGA and Price Chopper. Empire Company owns 70% of Sobeys. Like Loblaw, Sobeys has expanded into non-food merchandise. It has also re-modeled many of its stores, and installed new computerized cash registers. Over half of Sobeys’ stores now use the same computerized inventory system, which should cut its long-term operating costs. The company also plans to streamline more of its distribution activities, including consolidating its operations into a planned automated facility near Toronto....
LOBLAW COMPANIES LTD. $51 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 274.1 million; Market cap: $14.0 billion; SI Rating: Above average) is Canada’s largest food seller, with about 1,700 stores under the Loblaws, Fortinos, No Frills, Provigo and Zehrs banners. It also distributes groceries to other stores. George Weston Ltd. owns 63% of Loblaw’s shares. In 2004, the company began a major restructuring in the face of growing competition from Wal- Mart and Costco. It expanded the amount of non-food merchandise its stores carry, and consolidated its distribution centres. However, problems with the new distribution system led to shortages of popular items at some stores. In addition, the new merchandise did not draw as many customers as Loblaw hoped....
MAPLE LEAF FOODS INC. $14 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 127.6 million; Market cap: $1.8 billion; SI Rating: Average) is Canada’s largest supplier of fresh and frozen meat products, mostly under the Maple Leaf and Schneiders brands. It also makes animal feeds and owns 87.5% of Canada Bread Company, Ltd., which makes bread, pasta and sauces. Maple Leaf’s revenue hovered around $5.0 billion from 2001 to 2003. In 2004, it acquired rival Schneider Corp. for $499 million. Consequently, revenue grew to $6.4 billion in 2004, and $6.5 billion in 2005. Profits rose from $0.55 a share (total $57.4 million) in 2001 to $0.71 a share ($84.7 million) in 2002, but fell to $0.27 a share ($35.1 million) in 2003 due to restructuring costs. The Schneider acquisition helped lift earnings in 2004 to $0.89 a share ($102.3 million), but more restructuring costs cut profits in 2005 to $0.72 a share ($94.2 million)....
SAPUTO INC. $39 (Toronto symbol SAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 103.2 million; Market cap: $4.0 billion; SI Rating: Average) is Canada’s largest producer of dairy products. Major brands include Saputo, Armstrong, Stella and Dairyland. The company is also the fifth-largest cheese producer in the United States, and the third-largest dairy company in Argentina. Saputo’s Canadian businesses supply 80% of its profit. Revenue fell from $3.5 billion in 2002 (fiscal years ended March 31) to $3.4 billion in 2003, but climbed steadily to $4.0 billion in 2006. Profits rose from $1.54 a share (total $160.2 million) in 2002 to $2.20 a share ($232.1 million) in 2005. A writedown cut profits in 2006 to $1.82 a share ($192.1 million). Much of Saputo’s recent growth has come from acquisitions. That’s because the North American dairy business is a mature, slow-growing industry, and acquisitions are a faster and at times cheaper way to expand market share than internal growth....