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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H.J. HEINZ COMPANY $40 (New York symbol HNZ; WSSF Rating: Above average) has sold its New Zealand poultry-processing business for $165 million, which is about 24% more than the $133.2 million or $0.39 a share that the company earned from continuing operations in its third fiscal quarter ended January 31, 2006. This is one of several sales of overseas assets that the company has carried out since last year. It wants to focus on the three businesses where it has a leading market position: ketchup and sauces; meals and snack foods; and infant foods. Heinz still has several smaller operations it wants to sell, but it has now completed most of its planned asset sales. It has also cut its manufacturing facilities by 15%, and shrunk the number of products it makes....
VERSACOLD INCOME FUND $8.85 (Toronto symbol ICE.UN; SI Rating: Extra risk) paid $396.7 million in December 2005 for the public refrigerated warehouse business of Peninsular and Oriental Steam Navigation Co. That made Versacold the world’s second-largest operator of refrigerated warehouses, with 74 locations in Canada, the United States, Australia, New Zealand and Argentina. Thanks to the P&O acquisition, Versacold’s income in the three months ended December 31, 2005 rose 50.0%, to $0.18 a unit (total $4.5 million) from $0.12 a unit ($2.9 million) a year earlier. These figures exclude restructuring costs and other nonrecurring items. Revenue grew 52.6%, to $70.2 million from $46.0 million. The latest revenue figure included $20.8 million from the new assets....
SNC-LAVALIN GROUP INC. $32 (Toronto symbol SNC; SI Rating: Average) specializes in building large public works projects, such as water treatment plants, roads and bridges. It often buys small engineering firms to expand its share of the world engineering market. SNC also operates public facilities under long-term concession contracts. The largest of these is its 16.77% stake in Highway 407, a toll highway just north of Toronto that uses electronic tracking devices to toll vehicles automatically instead of traditional toll booths. The highway is still losing money, but losses shrank by 68% in 2005. This investment should soon earn a profit, particularly now that the highway’s owners and the Ontario government have settled their dispute over recent toll hikes....
SHAWCOR LTD. $19 (Toronto symbol SCL.SV.A; SI Rating: Average) makes sealants and coatings that protect oil and natural gas pipelines from corrosion. It also inspects pipelines for damage, and makes drilling and other equipment for the oil and gas industry. The company has used small acquisitions to enhance its market share in the past few years. For example, it recently launched a takeover offer for publicly traded Garneau Inc., which operates a pipeline coating plant in Alberta. ShawCor owns 19% of Garneau, and the Garneau family owns 45%. The Garneau family is negotiating with ShawCor to retain the manufacturing operations, which make equipment for oil and gas producers. The deal was to cost ShawCor $22.6 million, but that includes the manufacturing business. To put that figure in context, ShawCor earned $0.30 a share (total $21.8 million) from continuing operations in the three months ended December 31, 2005. That’s a big improvement over the $0.16 a share ($12.3 million) it made in the year-earlier quarter, when losses from its now-closed pipecoating facility in Alabama weighed on its earnings. Revenue rose 28.1%, to $291.7 million from $227.7 million....
SAPUTO INC. $33 (Toronto symbol SAP; SI Rating: Average) has made itself the top dairy producer in Canada in the past few years through acquisitions. However, heavy regulation limits Saputo’s growth in Canada. Consequently, the company is aggressively expanding outside Canada. It is targeting the United States where it’s now the fifth-largest cheese producer, and Argentina, where it’s the third-largest dairy company. Saputo earned $0.43 a share (total $45.0 million) in its third fiscal quarter ended December 31, 2005, down 21.8% from $0.55 a share ($58.3 million) a year earlier....
TELUS CORP. (Toronto symbols T $44 and T.NV $44; SI Rating: Above average) is Canada’s second-largest telecommunications provider, after BCE Inc. It provides local and long distance telephone services to roughly 5 million customers, mainly in Alberta, British Columbia and parts of Quebec. It also provides Internet access services to roughly 1 million subscribers. Telus’s revenue slipped from $7.1 billion in 2001 to $7.0 billion in 2002, but rose to $8.1 billion in 2005. It lost $0.51 a share (total $145.8 million) from continuing operations in 2001, as well as $0.75 a share ($235.8 million) in 2002, mainly due to restructuring costs following the Clearnet acquisition. However, earnings improved from $0.92 a share ($324.4 million) in 2003 to $1.94 a share ($700.3 million) in 2005. Most of Telus’s recent growth comes from its wireless division, which is Canada’s largest wireless service provider with 4.5 million customers (36% of the market). The company is also doing a good job of hanging on to its customers, and getting them to sign long-term service contracts....
CANADIAN UTILITIES LTD. $39 (Toronto symbol CU.NV; SI Rating: Above average) supplies electricity and natural gas to over 1 million customers, primarily in Alberta. It also invests in overseas gas and electricity assets. In the three months ended December 31, 2005, earnings fell to $0.69 a share from $0.71 a year earlier, mostly due to higher gas franchise fees paid to municipalities. Higher electricity rates helped push revenue up 6.8%, to $680.3 million from $637.0 million. The company generated cash flow of $5.17 a share in 2005, up 22.2% from $4.23 in 2004. However, that failed to fully cover its capital costs of $4.13 a share, and its $1.10 dividend....
TRANSALTA CORP. $23 (Toronto symbol TA; SI Rating: Average) operates 51 power plants in Canada, the U.S., Mexico and Australia. It also owns 50% of a major Canadian wind farm operator. In the past few years, the company has sold its regulated operations to focus solely on its nonregulated plants. However, it sells roughly 90% of its power under long-term, firm-price contracts or directly to specific customers such as carmakers and hospitals, which helps cut its exposure to sometimes volatile electricity prices. It also uses hedges to shield itself from rising fuel costs....
EMERA INC. $20 (Toronto symbol EMA; SI Rating: Average) supplies roughly 95% of Nova Scotia’s electricity needs. This business accounts for over 80% of its income. It also owns the main electrical utility in Bangor, Maine, and holds interests in other power-related projects. In the three months ended December 31, 2005, Emera earned $0.34 a share from continuing operations, up 25.9% from $0.27 a year earlier. The savings from a new natural gas supply deal helped offset higher oil and coal costs. Revenue rose 3.7%, to $297.1 million from $286.5 million. Nova Scotia regulators let the company raise its power rates by 5.3% in 2005. Emera is now asking for a 13% hike in 2006, to cover its higher fuel costs. However, regulators will probably reject this request and approve a smaller rate hike....
FORTIS INC. $23 (Toronto symbol FTS; SI Rating: Above average) operates regulated and non-regulated power systems in Canada, the United States, Belize and the Cayman Islands. It also owns hotels and commercial real estate properties, mainly in Atlantic Canada. In 2004, the company paid $1.5 billion in cash and stock for regulated electrical utilities in Alberta and British Columbia. This helped cut Fortis’s income from its power operations in Atlantic Canada, from 50% of earnings to 30% in 2005. However, Fortis’s earnings in the fourth quarter of 2005 only crept up to $22.3 million from $21.2 million a year earlier. That’s mainly because a settlement with Alberta regulators cut the Alberta subsidiary’s earnings in the latest quarter by $3 million. Per-share earnings remained unchanged at $0.21, while revenue grew 4.7%, to $353.1 million from $337.2 million....