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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ANDREW PELLER LTD. $14 (Toronto symbol ADW.A; Income Portfolio, Consumer sector; Shares outstanding: 11.3 million; Market cap: $158.2 million; Price-to-sales ratio: 0.7; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.andrewpeller.com) is Canada’s second-largest producer of wines, after Vincor International. The company has wineries in Nova Scotia, Ontario and British Columbia.
In its 2014 fiscal year, which ended March 31, 2014, Peller’s sales rose 3.0%, to $297.8 million from $289.1 million in fiscal 2013. That’s mainly because it launched several successful products. Demand for its premium wines also remains strong.
However, strong competition in Western Canada and the Maritimes, as well as higher costs for wine and juice from overseas suppliers, cut Peller’s earnings by 3.4%, to $14.0 million from $14.5 million. Per-share earnings fell 2.9%, to $1.01 from $1.04. Without unusual items, such as losses on hedging contracts, earnings would have risen 4.5%.
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In its 2014 fiscal year, which ended March 31, 2014, Peller’s sales rose 3.0%, to $297.8 million from $289.1 million in fiscal 2013. That’s mainly because it launched several successful products. Demand for its premium wines also remains strong.
However, strong competition in Western Canada and the Maritimes, as well as higher costs for wine and juice from overseas suppliers, cut Peller’s earnings by 3.4%, to $14.0 million from $14.5 million. Per-share earnings fell 2.9%, to $1.01 from $1.04. Without unusual items, such as losses on hedging contracts, earnings would have risen 4.5%.
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MOLSON COORS CANADA INC. (Toronto symbols TPX.A $78 and TPX.B $78; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 184.8 million; Market cap: $14.4 billion; Price-to-sales ratio: 2.0; Dividend yield: 2.1%; TSINetwork Rating: Average; www.molsoncoors.com) is the world’s fifth-largest brewer.
In June 2012, Molson Coors paid $3.5 billion for StarBev, which owns nine breweries in central and eastern Europe (all amounts except share prices and market cap in U.S. dollars). The purchase has helped offset slower North American beer sales.
The company is also doing a good job of cutting StarBev’s costs and making it more efficient. In the three months ended March 31, 2014, Molson Coors’ earnings before one-time items jumped 115.2%, to $102.2 million from $47.5 million a year earlier. Per-share earnings rose 111.5%, to $0.55 from $0.26, on more shares outstanding.
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In June 2012, Molson Coors paid $3.5 billion for StarBev, which owns nine breweries in central and eastern Europe (all amounts except share prices and market cap in U.S. dollars). The purchase has helped offset slower North American beer sales.
The company is also doing a good job of cutting StarBev’s costs and making it more efficient. In the three months ended March 31, 2014, Molson Coors’ earnings before one-time items jumped 115.2%, to $102.2 million from $47.5 million a year earlier. Per-share earnings rose 111.5%, to $0.55 from $0.26, on more shares outstanding.
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CANADIAN IMPERIAL BANK OF COMMERCE $97 (Toronto symbol CM; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 397.4 million; Market cap: $38.5 billion; Price-to-sales ratio: 2.2; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.cibc.com) took control of FirstCaribbean, which offers banking services in 17 Caribbean countries, in December 2006. CIBC now holds a 91.7% stake. The region’s slow growth and high unemployment have prompted CIBC to write down the value of this investment by $420 million.
Due to this charge, as well as costs to launch a new loyalty plan for travellers after it lost the Aeroplan contract, CIBC’s earnings in the quarter ended April 30, 2014 fell 64.5%, to $306 million, or $0.73 a share. If you exclude all unusual items, the bank earned $887 million, or $2.17 a share. A year earlier, CIBC earned $862 million, or $2.09 a share.
Revenue rose just 1.4%, to $3.17 billion from $3.12 billion, mainly due to the loss of the Aeroplan deal.
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Due to this charge, as well as costs to launch a new loyalty plan for travellers after it lost the Aeroplan contract, CIBC’s earnings in the quarter ended April 30, 2014 fell 64.5%, to $306 million, or $0.73 a share. If you exclude all unusual items, the bank earned $887 million, or $2.17 a share. A year earlier, CIBC earned $862 million, or $2.09 a share.
Revenue rose just 1.4%, to $3.17 billion from $3.12 billion, mainly due to the loss of the Aeroplan deal.
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TRANSCANADA CORP. $50 (Toronto symbol TRP; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 707.4 million; Market cap: $35.4 billion; Price-to-sales ratio: 3.8; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.transcanada.com) operates a 68,500-kilometre pipeline network that pumps natural gas from Alberta to Eastern Canada and the U.S. The company’s pipelines supply 20% of North America’s natural gas. In 2013, they provided 51% of TransCanada’s revenue and 53% of its earnings.
The company also owns or invests in power plants in Alberta, Ontario, Quebec and the northeastern U.S. In all, these facilities have over 11,800 megawatts of generating capacity. TransCanada’s electricity operations now supply 36% of its revenue and 30% of its earnings.
In 2011, the company started up its oil pipeline division. This business mainly consists of the Keystone pipeline, which pumps oil from Alberta to refineries in Illinois, and a distribution hub in Cushing, Oklahoma. Oil pipelines supply the remaining 13% of TransCanada’s revenue and 17% of its earnings.
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The company also owns or invests in power plants in Alberta, Ontario, Quebec and the northeastern U.S. In all, these facilities have over 11,800 megawatts of generating capacity. TransCanada’s electricity operations now supply 36% of its revenue and 30% of its earnings.
In 2011, the company started up its oil pipeline division. This business mainly consists of the Keystone pipeline, which pumps oil from Alberta to refineries in Illinois, and a distribution hub in Cushing, Oklahoma. Oil pipelines supply the remaining 13% of TransCanada’s revenue and 17% of its earnings.
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ENBRIDGE INC. $51 (Toronto symbol ENB; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 834.8 million; Market cap: $42.6 billion; Price-to-sales ratio: 1.2; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.enbridge.com) operates pipelines that pump oil and natural gas from Western Canada to Eastern Canada and the U.S. The company’s pipelines also handle 53% of Canada’s crude oil exports to the U.S.
Pipelines supply 90% of Enbridge’s revenue. The remaining 10% comes from distributing gas to two million consumers in Ontario, Quebec, New Brunswick and New York State.
In the quarter ended March 31, 2014, Enbridge’s revenue jumped 33.2%, to $10.5 billion from $7.9 billion a year earlier, mainly because the company is pumping more crude from the Alberta oil sands.
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Pipelines supply 90% of Enbridge’s revenue. The remaining 10% comes from distributing gas to two million consumers in Ontario, Quebec, New Brunswick and New York State.
In the quarter ended March 31, 2014, Enbridge’s revenue jumped 33.2%, to $10.5 billion from $7.9 billion a year earlier, mainly because the company is pumping more crude from the Alberta oil sands.
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METRO INC. $67 (Toronto symbol MRU; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 87.0 million; Market cap: $5.8 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.8%; TSINetwork Rating: Average; www.metro.ca) is Canada’s third-largest supermarket operator, after Loblaw (also in this issue) and Sobeys. It now has 600 supermarkets and 250 drugstores.
To cut its reliance on Quebec, which accounted for nearly all of its revenue, Metro bought A&P Canada for $1.7 billion in 2005. The chain consisted of 240 food stores in Ontario, mostly under the A&P and Dominion names.
Since then, Metro has mainly focused on improving the profitability of its stores. Lower costs will give the company more flexibility to adjust its prices, and cope with the recent 7.3% increase in Ontario’s minimum wage.
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To cut its reliance on Quebec, which accounted for nearly all of its revenue, Metro bought A&P Canada for $1.7 billion in 2005. The chain consisted of 240 food stores in Ontario, mostly under the A&P and Dominion names.
Since then, Metro has mainly focused on improving the profitability of its stores. Lower costs will give the company more flexibility to adjust its prices, and cope with the recent 7.3% increase in Ontario’s minimum wage.
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BANK OF NOVA SCOTIA $64 (www.scotiabank.com) earned $1.32 a share in its fiscal 2014 fourth quarter, which ended October 31, 2014. That figure excludes several unusual items, mainly severance costs related to the closure of 120 branches at its international division and the consolidation of some Canadian offices....
Wells Fargo and J.P. Morgan passed the Federal Reserve’s latest “stress test,” which measures how well financial firms would cope with a sharp jump in unemployment, falling stock prices and other unfavourable conditions. Here is our analysis of the two banks, both of which we cover regularly in our advisory on U.S. stocks, Wall Street Stock Forecaster....
Ottawa continues to impose new rules on Canada’s main wireless firms in an effort to encourage more competition. These measures include restricting the new radio frequencies (or spectrum) they can buy, cutting wireless contract terms from three years to two and capping roaming charges. Meanwhile, new rules will force TV providers to let subscribers buy the channels they want, instead of having to purchase a package....
TORSTAR CORP. $7.74 (www.torstar.com) is selling its Harlequin book-publishing subsidiary to News Corp. (Nasdaq symbol NWSA), the parent company of publishing firm HarperCollins. The company will receive $455 million, which is equal to 73% of its $623.4-million market cap. Torstar will put the proceeds toward its bank loans and other debt, which stood at $192.9 million on March 31, 2014.
Meanwhile, Torstar’s earnings in the first quarter of 2014 (including Harlequin) rose 70.2%, to $7.1 million, or $0.09 a share. It earned $4.2 million, or $0.05 a share a year earlier. The gain is entirely due to savings from an ongoing restructuring plan, mainly job cuts. Weak advertising sales at its newspapers reduced its overall revenue by 6.7%, to $292.4 million from $313.4 million.
Selling Harlequin means Torstar will focus entirely on its cyclical newspaper and Internet businesses. That adds risk. However, the cash from the sale will help it sustain its current dividend. Best Buy.
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Meanwhile, Torstar’s earnings in the first quarter of 2014 (including Harlequin) rose 70.2%, to $7.1 million, or $0.09 a share. It earned $4.2 million, or $0.05 a share a year earlier. The gain is entirely due to savings from an ongoing restructuring plan, mainly job cuts. Weak advertising sales at its newspapers reduced its overall revenue by 6.7%, to $292.4 million from $313.4 million.
Selling Harlequin means Torstar will focus entirely on its cyclical newspaper and Internet businesses. That adds risk. However, the cash from the sale will help it sustain its current dividend. Best Buy.
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