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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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....
RBC CANADIAN EQUITY FUND $27.30 (CWA Rating: Conservative) (RBC Funds, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-800-463-3863; Web site: www.royalbank.com. No load — deal directly with the bank) invests mostly in larger-capitalization stocks, but also looks for opportunities in small and mid-cap stocks. The fund’s 10 largest holdings are TD Bank, Manulife Financial, Bank of Nova Scotia, Royal Bank, EnCana, Barrick Gold, CN Railway, CIBC, Suncor Energy and Bank of Montreal. The $4.7 billion fund holds 31.6% of its holdings in Financial stocks. It also holds 21.5% in Energy stocks....
CANADIAN IMPERIAL BANK OF COMMERCE $99 (Toronto symbol CM; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is the fifth-largest Canadian bank, with $304.0 billion in assets. CIBC ran into trouble a few years ago, and absorbed big losses on the shut down of its U.S. retail banking operations. It also had to pay $2.8 billion to settle a class action lawsuit over its involvement with Enron. But the bank’s focus on its less risky retail businesses is now paying off. It earned $2.32 a share (total $819 million) in its fourth fiscal quarter ended October 31, 2006, up 12.6% from $2.06 a share ($728 million) a year earlier. If you exclude unusual items, per-share income rose 38.9%, to $2.00 from $1.44. Foreign exchange losses helped cut revenue in the quarter by 14.7%, to $2.9 billion from $3.4 billion. The year-earlier figure also included several one-time gains....
BANK OF MONTREAL $68 (Toronto symbol BMO; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is Canada’s fourth-largest bank, with assets of $320.0 billion. Outside of Canada, its biggest operation is Harris Bank, which operates 200 branches in Chicago. The United States accounts for roughly 15% of Bank of Montreal’s income. Harris aims to expand its operations in the U.S. Midwest to between 350 and 400 branches, which will give it the scale it needs to compete with bigger U.S. lenders. As part of this strategy, it recently acquired First National Bank & Trust for $325 million. That will add 32 branches in Indiana, and $1.3 billion U.S. in assets....
BANK OF NOVA SCOTIA $51 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is the third-largest bank in Canada, with assets of $379.0 billion. Bank of Nova Scotia has few operations in the U.S. It prefers to focus on developing countries in Latin America and Asia where it has a better chance to improve its market share. Its operations outside of Canada now supply 30% of its earnings. A good example of the bank’s strategy is its recent $90 million purchase of a 68% stake in Dehring Bunting & Golding Ltd., one of Jamaica’s largest brokerage firms. Bank of Nova Scotia plans to use its retail branches in the Caribbean to promote Dehring’s services....