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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TORSTAR CORP. $21 (Toronto symbol TS.B (old symbol TS.NV.B); Conservative Growth Portfolio, Consumer sector; SI Rating: Above average) is one of Canada’s top media companies. It’s best known as the publisher of The Toronto Star, the largest daily newspaper in Canada. It also publishes over 150 daily and weekly newspapers in Southern Ontario. Newspapers account for roughly two-thirds of the company’s revenue, and around 55% of its profit. The rest comes from wholly owned Harlequin Enterprises Ltd., the world’s largest publisher of romance fiction titles. Torstar’s revenue grew slowly, from $1.42 billion in 2001 to $1.57 billion in 2005. These figures exclude revenue from discontinued businesses. In 2001, the company earned just $0.04 a share (total $3.0 million), mainly due to unusual items. Income in 2002 rose to $1.64 a share (total $125.3 million), but slipped to $1.59 a share ($123.5 million) in 2003. Restructuring costs cut Torstar’s 2004 profit to $1.42 a share ($112.7 million). In 2005, earnings improved to $1.52 a share ($118.8 million)....
CANADIAN IMPERIAL BANK OF COMMERCE $83 (Toronto symbol CM; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is the fifth-largest bank in Canada, with assets of $288.9 billion. In 2005, CIBC paid $2.8 billion to settle class-action lawsuits over its involvement with U.S. energy trading firm Enron Corp. We felt at the time that CIBC did not intentionally try to deceive investors, and the stock would bounce back. It’s now back to pre-settlement levels. The bank’s new managers now aim to cut costs by $250 million this year. To put that in context, CIBC earned $1.62 a share (total $580 million) in its first fiscal quarter ended January 31, 2006, down 16.5% from $1.94 a share ($707 million) a year earlier. If you exclude gains on the sale of assets in the year-earlier period, CIBC’s pershare earnings actually grew 11.7%....
BANK OF MONTREAL $62 (Toronto symbol BMO; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is Canada’s fourth-largest bank, with assets of $305.8 million. The bank continues to expand its Chicago operations, where its Harris Bank subsidiary is the area’s second-largest bank in terms of deposits. In 2005, acquisitions added 21 branches to the Harris network, and expanded its geographic reach to Indiana. Harris now operates close to 200 branches, and supplies 10% of Bank of Montreal’s revenue, and 5% of its profit....
BANK OF NOVA SCOTIA $45 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is Canada’s third-largest bank, with total assets of $325.0 billion. The bank has the highest international exposure of the big five Canadian banks, and now gets nearly 30% of its revenue and income from overseas assets. Bank of Nova Scotia prefers to invest in developing areas like the Caribbean and Latin America, where spreading prosperity is fueling demand for banking services. It has few operations in the United States. For example, Bank of Nova Scotia just agreed to pay an undisclosed sum for Citigroup Inc.'s retail banking business in the Dominican Republic. The purchase will make it that country’s fifth-largest bank, and enhances its credit card and consumer loan operations....
TORONTO-DOMINION BANK $62 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is the secondlargest Canadian bank, with $384.4 billion in assets. Like Royal, TD is aggressively expanding in the U.S., mainly through subsidiary TD Banknorth Inc., which operates 400 branches in northern New England and upstate New York. TD now gets 8% of its revenue from the U.S. operations. Also like Royal, TD is concentrating on markets close to its current operations. For example, TD Banknorth recently agreed to buy Interchange Financial Services Corp., which has 30 bank branches in northern New Jersey, for $480.6 million U.S. That will make TD Banknorth the ninth-largest bank in New Jersey, with around 130 branches....
ROYAL BANK OF CANADA $47 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is Canada’s largest bank, with assets of $487.9 billion. In the past few years, Royal has steadily built up its U.S. operations, mainly through acquisitions of regional banks and wealth management firms. Royal prefers to focus on smaller markets like North Carolina where it can quickly build market share. This way, it avoids competing directly with larger U.S. banks. Thanks to a restructuring, earnings from Royal’s U.S. operations in its first fiscal quarter ended January 31, 2006 rose 3.1%, to $101 million from $98 million a year earlier. If you exclude the impact of the rising Canadian dollar, profit at the U.S. division grew 9%. Royal itself earned $0.89 a share (total $1.17 billion) from continuing operations in the quarter, up 18.7% from $0.75 a share ($977 million) a year earlier (all pershare amounts adjusted for a 2-for-1 stock split in April 2006)....
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....