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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BCE INC. $33 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; SI Rating: Above average) is Canada’s largest provider of traditional telephone services, with over 12 million customers in Ontario and Quebec. It also provides Internet access (Sympatico), satellite TV (Bell ExpressVu) and wireless services (Bell Mobility). In the past few months, the company has moved to unlock some of its value. It recently sold most of its interest in Bell Globemedia, the private company that owns The Globe and Mail and CTV Television. BCE also plans to sell a minority stake in satellite operator Telesat to the public. In July 2006, BCE merged its rural telephone business with 53.2%-owned subsidiary Aliant Inc. into a new income trust called Bell Aliant Regional Communications Income Fund....
ENCANA CORP. $50 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; SI Rating: Average) gets over 75% of its production from natural gas. The recent gas price drop has cut EnCana’s stock price from a peak of $65 in October 2005. Gas prices may move up again during the winter. EnCana’s deal to merge some of its oil sands assets with ConocoPhillips also cuts its risk. The stock is reasonably priced at 11 times earnings and 5 times cash flow....
AGRIUM INC. $30 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; SI Rating: Average) needs natural gas to make its fertilizers. Thanks partly to falling gas prices, the stock has gained 20% in 2006, and 70% since we made it our Stock of the Year in 2005. Agrium will probably earn $1.39 U.S. a share in 2006, and the stock trades at 19.0 times that figure. But earnings could reach $1.80 U.S. in 2007, which implies a more reasonable p/e of 14.7. Agrium is a buy.
GENNUM CORP. $11.50 (Toronto symbol GND; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Above average) is the highest rated stock in the bunch. It makes chips that enhance the quality of video signals, mostly for major TV display makers and broadcasters. This business supplies two-thirds of its revenue. Gennum also makes audio chips for hearing aids and headsets. Demand for high-definition TV sets is growing fast, and Gennum has won several new video chip contracts in the past year. The company’s new audio headsets, which help filter excess sounds in noisy environments, also have great potential. The company is free of long-term debt and has a healthy record of earnings. But its small size may make some investors wonder if it can live up to its potential....
NORTEL NETWORKS CORP. $2.60 (Toronto symbol NT; Aggressive Growth Portfolio, Manufacturing & Industry section; SI Rating: Speculative) is one of the world’s leading suppliers of telephone and computer network equipment to large telephone service providers and corporations. Nortel has completed its recent accounting review, and is now up to date with its earning filings. In the second quarter of 2006, it earned $0.08 a share (total $366 million), compared with a loss of $0.01 a share ($33 million) a year earlier. (All amounts except share price in U.S. dollars.) However, the latest results included a partial reversal of an earlier charge to settle a shareholder class-action lawsuit. That increased income in the latest quarter by $510 million, and offset $45 million in restructuring costs and a $10 million loss on the sale of assets. The loss in the year-earlier quarter included $92 million in restructuring costs and an $11 million loss on asset sales. Revenue in the quarter grew 4.6%, to $2.74 billion from $2.62 billion, mostly due to strong demand for wireless equipment....
THE WESTAIM CORP. $3.90 (Toronto symbol WED; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Speculative) is the riskiest of the three. It develops technologies through two subsidiaries: iFire Technology Corp. (wholly owned) and Nucryst Pharmaceutical Corp. (75.0%-owned, Toronto symbol NCS). Nucryst sold shares to the public late last year, and Westaim aims to eventually sell stock in iFire as well. iFire is currently developing a faster, cheaper way to make flat-panel displays that it hopes to license to TV manufacturers....
SLEEMAN BREWERIES LTD. $17.38 (Toronto symbol ALE; Aggressive Growth Portfolio, Consumer sector, SI Rating: Average) has accepted a friendly $17.50-a-share all-cash offer from Japan’s Sapporo Breweries Ltd. That’s a 150.0% gain over the $7 that we first recommend Sleeman at in our November 1999 issue. Two-thirds of Sleeman’s shareholders must approve the takeover at a special meeting in October 2006. We advise Sleeman investors to vote in favour of the deal, and tender their shares to get the full $17.50.
INCO LTD. $85.50 (Toronto symbol N; Conservative Growth Portfolio; Resources sector; SI Rating: Average) is the world’s largest producer of nickel. It recently dropped a plan to merge with U.S.-based copper producer Phelps Dodge Corp. It now seems likely that an $86.00-a-share all-cash offer from Brazilian mining firm Companhia Vale do Rio Doce (CVRD) will succeed. We first recommended Inco at $41 in our January, 1995 issue, and the CVRD offer works out to a gain of 109.8%. Inco will undoubtedly try to attract another bidder, if only to get CVRD to raise its bid....
ALCAN INC. $47 (Toronto symbol AL; Conservative Growth Portfolio, Resources sector; SI Rating: Average) is the world’s second-largest producer of aluminum, after U.S.-based Alcoa Inc. Canada accounts for about half of Alcan’s aluminum production, while the other half comes from operations in 14 other countries. The company is also a leading producer of aluminum products, including aluminum sheet, foil, wire and cable, auto parts and construction products. Alcan gets about 45% of its revenue from bulk aluminum sales, and 55% from aluminum products. Alcan’s revenue fell from $12.6 billion in 2001 to $12.5 billion in 2002 (all amounts except share price in U.S. dollars). In late 2003, Alcan acquired European aluminum producer Pechiney SA. That pushed revenue up to $13.6 billion in 2003, and to $24.9 billion in 2004. To satisfy competition regulators, Alcan spun off its rolled aluminum product operations as a separate company called Novelis Inc. Consequently, revenue in 2005 fell to $20.3 billion....
AGRIUM INC. $27 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; SI Rating: Average) is one of the world’s largest producers of agricultural fertilizers, with plants in Canada, the United States and Argentina. The company sells its products through independent wholesalers, as well as through 500 company-owned retail outlets in the U.S. and South America. Agrium’s revenue grew from $2.1 billion in 2001 to $3.3 billion in 2005, mainly due to acquisitions (all amounts except share price in U.S. dollars). It lost $0.06 a share in 2001 and $0.08 a share in 2002, as poor weather in North America hurt fertilizer demand. Agrium’s profits improved from $0.79 a share ($125 million) in 2003 to $2.11 a share ($283 million) in 2005. Cash flow per share more than tripled, from $1.07 in 2001 to $3.27 in 2005. Agrium is now using its strong cash flow to expand its retail operations, which supplied 18% of its 2005 profit. Earlier this year, it paid $474 million for Royster-Clark Ltd....