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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TRANSCONTINENTAL INC. $18 (Toronto symbol TCL.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 78.1 million; Market cap: $1.4 billion; Price-to-sales ratio: 0.8; Dividend yield: 3.8%; TSINetwork Rating: Average; www.tctranscontinental.com) is Canada’s leading printer of flyers, magazines, newspapers and books. It also publishes magazines and newspapers.

In its 2015 first quarter, which ended January 31, 2015, the company earned $36.1 million, up 36.7% from $26.4 million a year earlier. Earnings per share gained 35.3%, to $0.46 from $0.34, on more shares outstanding.

The gains mainly came from two recent acquisitions: in May 2014, Transcontinental bought U.S.- based Capri Packaging, a maker of plastic bags and pouches for cheese and other dairy products, for $146.1 million. And in June 2014, it paid Sun Media $78.8 million for 74 weekly newspapers in Quebec.

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THOMSON REUTERS CORP. $52 (Toronto symbol TRI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 791.8 million; Market cap: $41.2 billion; Price-to-sales ratio: 3.3; Dividend yield: 3.2%; TSINetwork Rating: Above Average; www.thomsonreuters.com) sells specialized information products in four main areas: financial (53% of 2014 revenue, 39% of earnings); legal (28%, 39%); tax (11%, 12%); and intellectual property and science (8%, 10%). (All amounts except share price and market cap in U.S. dollars.)

The Americas supplied 60% of Thomson’s 2014 revenue, followed by Europe (30%) and Asia (10%).

Many banks and financial services firms cut spending on the company’s products following the 2008 financial crisis. In response, it laid off staff and simplified its operations.

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POTASH CORP. OF SASKATCHEWAN $42 (Toronto symbol POT; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 832.1 million; Market cap: $34.9 billion; Price-to-sales ratio: 5.3; Dividend yield: 4.5%; TSINetwork Rating: Average; www.potashcorp.com) has suffered two recent setbacks. (All amounts except share price and market cap in U.S. dollars.)

First, the Saskatchewan government decided to change the timing of certain tax breaks for new potash mines and expansion projects. The province is also reviewing how it taxes potash producers.

Potash Corp. expects the new rules to cut its pre-tax earnings by $75 million to $100 million (Canadian) in 2015. To put that in context, it earned $1.5 billion, or $1.82 a share, in 2014.

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AGRIUM INC. $132 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 144.0 million; Market cap: $19.0 billion; Price-to-sales ratio: 1.2; Dividend yield: 3.0%; TSINetwork Rating: Average; www.agrium.com) gets 75% of its sales and 60% of its earnings from its retail stores, which consist of 1,450 locations in North America, South America and Australia. These outlets sell seed, fertilizer and other products to farmers. (All amounts except share price and market cap in U.S. dollars.)

The company gets the remaining 25% of its sales and 40% of its earnings by making nitrogen-based fertilizers from natural gas. It also operates potash and phosphate fertilizer mines. In the past few years, Agrium has built up its retail business through acquisitions. In December 2010, it paid $1.2 billion for AWB Ltd., which operated 220 stores in Australia In October 2013, the company added 210 stores in Western Canada and Australia in a $485-million deal with Viterra Inc.

These acquisitions, along with rising fertilizer prices, pushed up Agrium’s sales by 49.2%, from $10.7 billion in 2010 to $16.0 billion in 2012. Declining fertilizer prices cut its 2013 sales to $15.7 billion, but they improved to $16.0 billion in 2014.

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One of Canada’s last income trusts, Chemtrade Logistics turns industrial waste services and a big acquisition into a high dividend yield.
Despite pessimistic media forecasts, Canada’s banks remain strong and international exposure helps make Scotiabank a best buy.
TRANSCANADA CORP. $54 (www.transcanada.com) has increased its quarterly dividend by 8.3%, to $0.52 a share from $0.48. The new annual rate of $2.08 yields 3.9%. TransCanada has raised its payout each year since 2000. Best Buy.


ENBRIDGE INC. $58 (www.enbridge.com) plans to increase the capacity of a proposed pipeline project that will pump crude from oil sands projects in Alberta. It will mainly do this by increasing the diameter of part of the pipeline and boosting another section’s pumping power....
TELUS CORP. $42 (www.telus.com) is paying $1.5 billion for new radio frequencies (or spectrum) covering urban and rural areas in Western Canada, Ontario and Quebec. The price is slightly more than the $1.49 billion, or $2.41 a share, that Telus earned in 2014....
RIOCAN REAL ESTATE INVESTMENT TRUST $28 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 315.4 million; Market cap: $8.8 billion; Price-to-sales ratio: 7.0; Dividend yield: 5.0%; TSINetwork Rating: Average; www.riocan.com) owns all or part of 292 shopping centres in Canada, including 15 under development. These holdings account for 84% of the REIT’s rental revenue. The remaining 16% comes from 48 malls in the U.S.

In the past few years, RioCan took advantage of lower property values and interest rates to expand its portfolio. As a result, its revenue jumped 39.8%, from $882 million in 2010 to $1.2 billion in 2014.

Due to gains and losses on property sales, earnings fell from $6.04 a unit (or a total of $1.5 billion) in 2010 to $3.25 (or $873 million) in 2011. Earnings rebounded to $4.57 a unit (or $1.3 billion) in 2012 but declined to $2.10 a unit (or $663 million) in 2014.

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