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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TORONTO-DOMINION BANK $69 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is Canada’s second-largest bank with $392.9 billion in assets. Like Royal Bank, TD has expanded its American operations in the past few years. These businesses now provide around 45% of TD’s income, In 2006, TD combined the U.S. operations of its TD Waterhouse discount brokerage subsidiary with rival Ameritrade to form TD Ameritrade. TD owns 39.8% of this operation, which is now among the top three discount brokers in the U.S....
ROYAL BANK OF CANADA $54 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is the largest bank in Canada, with assets of $536.8 billion. It also operates in the United States and 30 other countries. International operations supply a third of its income. Royal has steadily built up its U.S. operations in the past few years. It recently bought Flag Financial Corp. for $456 million U.S. Flag Financial operates 17 branches in Atlanta. Royal also agreed to buy 39 branches in Alabama for an undisclosed sum. se purchases will strengthen Royal’s retail banking business in the fast-growing southeastern U.S. It also gives Royal more opportunities to offer its retail customers other services, such as insurance and wealth management....
FPI LTD. $7.85 earned $0.25 a share in the third quarter of 2006 compared with a loss of $0.35 a year earlier, thanks to cost controls and the extra earnings from recent acquisitions. However, sales fell 15.4%, to $174.5 million from $206.2 million, due to lower selling prices for fish products and the high Canadian dollar. Hold. FORDING CANADIAN COAL TRUST $24 has reorganized itself from an income trust into a royalty trust. The change removed restrictions on foreign ownership, and should increase Fording’s liquidity (the units also trade in New York). The new structure will not affect Fording’s current $3.80 annual distribution rate, which yields 15.8%. Buy. GENNUM CORP. $14 has gained over 40% in the past six months, mainly due to a new plan to improve customer service. The company also aims to expand its overseas sales. Gennum probably earned $0.55 a share in its fiscal year ended November 30, 2006. But profits could grow to $0.77 in fiscal 2007, and the stock trades at 18.2 times that figure. Buy....
MOODY’S CORP. $70 (New York symbol MCO) has increased its dividend 14.3%, from $0.07 a share to $0.08. The new annual rate of $0.32 yields 0.5%. The stock fell below $50 in July 2006 on fears that rising interest rates would cut investor interest in new corporate debt securities, and hurt demand for Moody’s ratings. It has recovered as rates stabilized, but it’s expensive at 32 times earnings. Hold. GENERAL MILLS INC. $58 (New York symbol GIS) has raised its dividend for the fourth time in just over two years. The new rate of $1.48 yields 2.6%. The company also plans to buy back more of its stock in 2007. Buy. PHILIPS ELECTRONICS N.V. $37 (New York symbol PHG) hopes to capture a larger share of Asia’s mobile phone market, which could grow by 50% in 2007. It has licensed its brand to a Chinese company that will make low-cost phones under a five-year deal. Buy....
SNC-LAVALIN GROUP INC. $32 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Average) is one of the world’s leading design and engineering companies, with operations in over 100 countries. It specializes in large public works projects like bridges and water treatment systems. The company is also a leading builder of electrical power plants and transmission systems. The recent rise in energy prices is good news for SNC, since many utilities are now looking for ways to cut consumption of oil and natural gas. High oil prices have also spurred interest in nuclear power plants. Another way SNC should benefit from high oil is from more public transit. SNC has designed and built mass transit systems in some of the world’s biggest cities....
FINNING INTERNATIONAL INC. $45 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; SI Rating: Above average) sells and leases Caterpillar brand heavy equipment to oil exploration, mining and forestry firms. The company’s operations in Western Canada supply 40% of its revenue. It also operates in South America (Argentina, Bolivia, Chile, and Uruguay) and the UK. In September 2006, Finning sold the materials handling operations of its UK division for $175 million. This business supplies forklifts and related machinery to warehouses and factories, and has struggled in the past few years. The company recorded a $32.7 million loss on the sale, but it should improve the long-term prospects of the remaining UK operations. Finning used the cash from the sale to pay down debt. Although the company had to pay a special charge on the early retirement of certain bonds ($0.07 a share), the move will cut its future interest expenses. Finning’s long-term debt now stands at 0.5 times equity, down from 0.6 times at the start of 2006....
SHAWCOR LTD. $25 (Toronto symbol SCL.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Average) makes sealants that protect oil and natural gas pipelines from rust and other forms of corrosion. The company also inspects and repairs pipelines, and makes specialty cables and wires. In the three months ended September 30, 2006, ShawCor’s earnings from continuing operations fell 52.2%, to $0.22 a share (total $16.6 million) from $0.46 a share ($34.7 million) a year earlier. However, the drop was entirely due to one-time items. The latest quarter included a $5.4 million charge related to ShawCor’s decision to scale down its operations in Nigeria due to political instability. The year-earlier earnings included an unusual $18.4 million tax gain. Revenue grew just 2.6%, to $245.3 million from $239.2 million, due to the timing of several major contracts. The recent rise in oil prices has spurred strong demand for ShawCor’s products and services, and the start-up of new contracts should increase its fourth quarter revenues....
AGRIUM INC. $36 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; SI Rating: Average) is a leading producer of nitrogen, phosphate and potash fertilizers and crop protection products. It has 12 major production facilities in Canada and the United States, and one in Argentina that it operates through a joint venture. Sales to farmers and other agricultural customers account for the bulk of Agrium’s sales. The company also sells its products to industrial companies. For example, forest companies use Agrium’s chemicals in the production of wood resins. Agrium’s revenue grew from $2.1 billion in 2001 to $3.3 billion in 2005, or 12.0% compounded annually (all amounts except share price in U.S. dollars). It lost $0.06 a share (total $7.0 million) in 2001, but earnings rose to $2.11 a share ($283.0 million) in 2005. Cash flow per share rose from $1.07 in 2001 to $3.27 in 2005....
LEGACY HOTELS REAL ESTATE TRUST $9.39 (Toronto symbol LGY.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Extra risk) owns 23 luxury hotels in Canada, including the Fairmont Royal York in Toronto and the Fairmont Queen Elizabeth in Montreal. It also owns two U.S. hotels. In the third quarter of 2006, Legacy earned $19.8 million, up 15.1% from $17.2 million a year earlier. However, per-unit profits rose just 5.3%, to $0.20 from $0.19. That’s because the conversion of a Legacy debenture increased the number of units outstanding by 11%. Revenue crept up to $223.0 million from $221.6 million, as higher room rates offset a drop in occupancy. Legacy’s Canadian hotels get about a third of their revenue from U.S. tourists. Proposed new rules that would force U.S. travelers to carry a passport could hurt its revenue. However, a drop in the Canadian dollar would offset the passport requirement. Meanwhile, the trust should generate enough cash to maintain its $0.32 distribution, which yields 3.4%. Legacy may also profit by converting some hotels to condominiums....
RIOCAN REAL ESTATE INVESTMENT TRUST $25 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Average) owns all or part of 203 large, outdoor suburban malls across Canada. In the three months ended September 30, 2006, RioCan earned $0.21 a unit from continuing operations, down slightly from $0.22 a year earlier, mainly due to higher interest and amortization expenses. However, cash flow per share rose 29.0%, to $0.40 from $0.31, while revenue grew 7.3%, to $160.7 million from $149.8 million. Demand by retailers for space in RioCan’s malls remains strong. In fact, the occupancy rate rose to 97.5% in the most recent quarter — a new record. National chains such as Wal-Mart and Loblaw account for 83% of RioCan’s rental revenue, which cuts RioCan’s risk....