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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TELUS CORP. $39 (Toronto symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 623.4 million; Market cap: $24.3 billion; Price-to-sales ratio: 2.2; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.telus.com) gets 54% of its revenue from its 7.8 million wireless subscribers across Canada. It also has 3.3 million phone customers, 1.4 million highspeed Internet users and 815,000 TV subscribers.
The company spent $1.14 billion on new spectrum in the recent auction. That will let it expand its high-speed wireless network to reach 97% of Canada’s population, up from 80% now.
Meanwhile, strong demand for wireless and high-speed Internet continues to offset weaker revenue from its land line business. Telus earned $1.4 billion in 2013, up 13.4% from $1.2 billion in 2012. Due to fewer shares outstanding, earnings per share gained 15.5%, to $2.16 from $1.87. Revenue rose 4.4%, to $11.4 billion from $10.9 billion.
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The company spent $1.14 billion on new spectrum in the recent auction. That will let it expand its high-speed wireless network to reach 97% of Canada’s population, up from 80% now.
Meanwhile, strong demand for wireless and high-speed Internet continues to offset weaker revenue from its land line business. Telus earned $1.4 billion in 2013, up 13.4% from $1.2 billion in 2012. Due to fewer shares outstanding, earnings per share gained 15.5%, to $2.16 from $1.87. Revenue rose 4.4%, to $11.4 billion from $10.9 billion.
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HOME CAPITAL GROUP INC. $44 (Toronto symbol HCG; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 69.5 million; Market cap; $3.1 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.5%; TSINetwork Rating: Average; www. homecapital.com) gets around 90% of its revenue by making residential mortgage loans to borrowers who don’t meet the stricter standards of larger, traditional lenders, like banks. Its clients include recent immigrants with limited credit histories, and self-employed people.
The remaining 10% of Home Capital’s revenue mainly comes from credit cards and other loans to consumers and businesses.
Low interest rates continue to fuel loan demand. As a result, Home Capital’s revenue rose 7.0% in 2013, to $949.5 million from $887.7 million in 2012. Earnings gained 14.8%, to $257.7 million, or $3.68 a share, from $224.6 million, or $3.23. (All per-share amounts adjusted for a 2-for-1 stock split in March 2014.)
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The remaining 10% of Home Capital’s revenue mainly comes from credit cards and other loans to consumers and businesses.
Low interest rates continue to fuel loan demand. As a result, Home Capital’s revenue rose 7.0% in 2013, to $949.5 million from $887.7 million in 2012. Earnings gained 14.8%, to $257.7 million, or $3.68 a share, from $224.6 million, or $3.23. (All per-share amounts adjusted for a 2-for-1 stock split in March 2014.)
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ENCANA CORP. $22 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 740.9 million; Market cap: $16.3 billion; Price-to-sales ratio: 2.8; Dividend yield: 1.4%; TSINetwork Rating: Average; www.encana.com) has decided not to sell its Deep Panuke offshore natural gas platform near Nova Scotia. This project reached full production of 300 million cubic feet a day in late 2013, which is equal to 11% of Encana’s total output.
Unusually cold winter weather has surred higher natural gas usage, and pushed up prices. That helps improve Deep Panuke’s profitability.
Encana is a buy.
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Unusually cold winter weather has surred higher natural gas usage, and pushed up prices. That helps improve Deep Panuke’s profitability.
Encana is a buy.
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LINAMAR CORP. $50 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.8 million; Market cap: $3.2 billion; Price-to-sales ratio: 0.9; Dividend yield: 0.8%; TSINetwork Rating: Extra Risk; www.linamar.com) continues to benefit from strong car sales, which have increased demand for its engines and transmissions. At the same time, rising construction activity has spurred sales of its self-propelled, scissor-type elevating work platforms, which it sells under the Skyjack name.
In 2013, the company earned a record $3.34 a share, up 49.1% from $2.24 in 2012. Sales rose 11.6%, to a record $3.6 billion from $3.2 billion.
The company also raised its quarterly dividend by 25.0%, from $0.08 a share to $0.10. The stock has nearly doubled in the past year, which is why the new annual rate of $0.40 yields just 0.8%. However, the stock is still attractive at 13.1 times Linamar’s likely 2014 earnings of $3.83 a share.
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In 2013, the company earned a record $3.34 a share, up 49.1% from $2.24 in 2012. Sales rose 11.6%, to a record $3.6 billion from $3.2 billion.
The company also raised its quarterly dividend by 25.0%, from $0.08 a share to $0.10. The stock has nearly doubled in the past year, which is why the new annual rate of $0.40 yields just 0.8%. However, the stock is still attractive at 13.1 times Linamar’s likely 2014 earnings of $3.83 a share.
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NORDION INC. $12 (Toronto symbol NDN; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 61.9 million; Market cap: $742.8 million; Price-to-sales ratio: 2.7; Dividend suspended in September 2012; TSINetwork Rating: Extra Risk; www.nordion.com) sells isotopes for cancer detection and research. It also makes products that sterilize food and surgical tools.
In its fiscal 2014 first quarter, which ended January 31, 2014, Nordion’s earnings jumped to $36.5 million, or $0.59 a share (all amounts except share price and market cap in U.S. dollars). A year earlier, it earned $2.9 million, or $0.05 a share. The gain was partly due to positive exchange rates, which added $0.31 to the latest per-share earnings.
These figures exclude unusual items, such as costs related to the company’s strategic review. As part of this process, Nordion sold its Targeted Therapies division for $190 million in July 2013. This business makes TheraSphere, a process for treating liver cancer using millions of microscopic glass beads containing radioactive materials.
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In its fiscal 2014 first quarter, which ended January 31, 2014, Nordion’s earnings jumped to $36.5 million, or $0.59 a share (all amounts except share price and market cap in U.S. dollars). A year earlier, it earned $2.9 million, or $0.05 a share. The gain was partly due to positive exchange rates, which added $0.31 to the latest per-share earnings.
These figures exclude unusual items, such as costs related to the company’s strategic review. As part of this process, Nordion sold its Targeted Therapies division for $190 million in July 2013. This business makes TheraSphere, a process for treating liver cancer using millions of microscopic glass beads containing radioactive materials.
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BLACKBERRY LTD. $10 (Toronto symbol BB; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 526.0 million; Market cap: $5.3 billion; Price-to-sales ratio: 0.6; No dividends paid; TSINetwork Rating: Speculative; www.blackberry.com) has jumped about 50% in the past three months, thanks to its new strategic plan.
In response to weak sales of its new BlackBerry 10 smartphones, the company is cutting 40% of its workforce and selling most of its Canadian real estate, mainly buildings near its Waterloo, Ontario, headquarters. It will lease back some of these properties after the sale.
As well, BlackBerry has signed a new five-year deal with Taiwan-based electronics maker Foxconn. Under this agreement, BlackBerry and Foxconn will jointly develop new smartphones, particularly for fast-growing markets like Indonesia. Foxconn will also assume responsibility for making these phones, which should help BlackBerry better manage its inventories and avoid costly writedowns of unsold phones.
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In response to weak sales of its new BlackBerry 10 smartphones, the company is cutting 40% of its workforce and selling most of its Canadian real estate, mainly buildings near its Waterloo, Ontario, headquarters. It will lease back some of these properties after the sale.
As well, BlackBerry has signed a new five-year deal with Taiwan-based electronics maker Foxconn. Under this agreement, BlackBerry and Foxconn will jointly develop new smartphones, particularly for fast-growing markets like Indonesia. Foxconn will also assume responsibility for making these phones, which should help BlackBerry better manage its inventories and avoid costly writedowns of unsold phones.
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TRANSCONTINENTAL INC. $15 (Toronto symbol TCL.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 78.0 million; Market cap: $1.2 billion; Price-to-sales ratio: 0.6; Dividend yield: 4.3%; TSINetwork Rating: Average; www. tctranscontinental.com) aims to cut its reliance on cyclical print advertising with a new deal to buy Missouri-based Capri Packaging, which makes plastic packaging for food. The company will pay $133 million U.S. when the deal closes later this year.
Capri’s two plants generate $72 million U.S. of annual revenue. Transcontinental feels its commercial printing expertise will help it make Capri more efficient.
Acquisitions always expose the buyer to hidden risks. However, Transcontinental has signed a 10-year deal to supply packaging to dairy producer Schreiber Foods, Capri’s parent company. Schreiber accounts for 75% of Capri’s revenue, so this acquisition is safer than it looks.
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Capri’s two plants generate $72 million U.S. of annual revenue. Transcontinental feels its commercial printing expertise will help it make Capri more efficient.
Acquisitions always expose the buyer to hidden risks. However, Transcontinental has signed a 10-year deal to supply packaging to dairy producer Schreiber Foods, Capri’s parent company. Schreiber accounts for 75% of Capri’s revenue, so this acquisition is safer than it looks.
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FINNING INTERNATIONAL INC. $31 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 172.1 million; Market cap: $5.3 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.0%; TSINetwork Rating: Above Average; www.finning.com) is the world’s largest dealer of tractors, bulldozers and trucks made by Caterpillar Inc. (New York symbol CAT). It also sells equipment made by other firms.
The company sells these products to customers in the mining, forest products and construction industries in Western Canada (50% of revenue, 47% of earnings), South America (37%, 45%) and the U.K. (13%, 8%).
Finning’s revenue rose 50.8%, from $4.5 billion in 2009 to $6.7 billion in 2013. That’s largely because prices for commodi- ties, like oil and coal, rebounded strongly after the recession, spurring heavy equipment demand.
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The company sells these products to customers in the mining, forest products and construction industries in Western Canada (50% of revenue, 47% of earnings), South America (37%, 45%) and the U.K. (13%, 8%).
Finning’s revenue rose 50.8%, from $4.5 billion in 2009 to $6.7 billion in 2013. That’s largely because prices for commodi- ties, like oil and coal, rebounded strongly after the recession, spurring heavy equipment demand.
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BELL ALIANT INC. (Toronto symbol BA; www.aliant.ca) sells phone and Internet services to 2.5 million customers in Atlantic Canada and rural Ontario and Quebec. It also provides wireless services through an alliance with BCE, which owns 45% of Bell Aliant....
TRANSCANADA CORP. $49 (Toronto symbol TRP; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 707.4 million; Market cap: $34.7 billion; Price-to-sales ratio: 3.8; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.transcanada.com) could begin work on its Keystone XL oil pipeline later this year after the U.S. State Department said it wouldn’t significantly harm the environment. However, the U.S. government will probably postpone a final decision until after the November mid-term elections. So far, TransCanada has spent $2 billion on Keystone XL. If the U.S. rejects the plan, TransCanada could use some of the steel pipe, valves and pumps on its other pipelines. That would limit any potential writedown. TransCanada is a buy.