Search

Companies that pay dividends have a “record” date. That raises two interesting questions investors often ask. Does the record date determine who owns the stock on that day and who gets the dividend? If so, why not buy stock the week before the day of record, collect the dividend and then sell the stock? Here is what you need to know. There are a number of dates related to payments from dividend stocks:...

Bombardier Inc., Toronto symbols BBD.A $4.56 and BBD.B, recently reported better-than-expected earnings. However, the company may have to cut its regional-jet production, due to slowing demand. That caused the stock to fall. In the three months ended July 31, 2011, Bombardier’s earnings rose 56.7%, to $210 million, or $0.12 a share (all amounts in U.S. dollars). A year earlier, the company earned $134 million, or $0.07 a share. The latest earnings easily beat the consensus estimate of $0.10 a share. Revenue rose 17.4% to $4.7 billion. Revenue at the Canadian stock’s railcar division (which supplies 56% of its overall revenue) rose 26.0%, mainly due to strong demand from public-transit systems in Europe. This business received $3.9 billion of new orders in the quarter, down from $4.3 billion a year earlier. Its order backlog is now $33.9 billion, up from $33.5 billion on January 31, 2011....

One of the strong points of Canadian investing in the past few years has been the reliability of our financial institutions compared to those in many other countries. That can even apply to companies that appear risky at first glance. Home Capital Group Inc. (Toronto symbol HCG; www.homecapital.com) offers mortgages to borrowers who don’t meet the stricter criteria of larger, traditional lenders. Even though Home Capital caters to riskier borrowers, it has avoided the huge credit losses that have crippled many U.S. banks. That’s because it continues to do a good job of identifying problem loans early. It then uses this information to restructure a borrower’s repayment terms and adjust its lending policies....

International Business Machines Corp., New York symbol IBM, is the world’s biggest computer company. As one of the oldest tech stocks in the industry, IBM has been able to adapt itself to changes over the years. In the past few years, IBM has shifted its focus from making computers to designing computer systems and managing them on behalf of clients. We analyze IBM and other U.S. tech stocks in Wall Street Stock Forecaster, our newsletter that gives you stock trading information and advice on U.S. companies....

MANITOBA TELECOM SERVICES INC. $33 (Toronto symbol MBT; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 65.7 million; Market cap: $2.2 billion; Price-to-sales ratio: 1.2; Dividend yield: 5.2%; TSINetwork Rating: Average; www.mtsallstream.com) has over 1.3 million telephone and wireless customers in Manitoba. This business now accounts for 54% of the company’s revenue. The remaining 46% comes from its Allstream division, which provides integrated telephone, Internet and other communication services to businesses across Canada. In 2010, Manitoba Telecom cut its quarterly dividend by 34.6%, to $0.425 a share from $0.65. The stock now yields 5.2%. The company also let shareholders reinvest their dividends in new shares at a 3% discount. These moves freed up cash for investments in its wireless and Internet networks. As a result of these investments, the company was able to start up its new Manitoba wireless network in March 2011. This new network is letting Manitoba Telecom sell more smartphones, including the hugely popular Apple iPhone. Strong demand for these phones and wireless data helped push up the company’s wireless revenue by 8.9% in the second quarter of 2011. Average revenue per user rose 3.8% from a year earlier....

TELUS CORP. (Toronto symbols T $53 and T.A $51; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 352.9 million; Market cap: $18.7 billion; Price-to-sales ratio: 1.7; Dividend yield: 4.2%; TSINetwork Rating: Above Average; www.telus.com) continues to expand its wireless business. As a result, it now gets 52% of its earnings from its 7.1 million wireless subscribers across Canada. The company gets the remaining 48% of its earnings from its traditional phone business, which has 3.7 million customers in B.C., Alberta and eastern Quebec. Telus also has 1.2 million Internet subscribers. The company continues to profit from rising demand for smartphones and wireless data. Smartphones now account for 42% of its wireless users under long-term contracts, up from 25% a year earlier....

BCE INC. $39 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 777.5 million; Market cap: $30.3 billion; Price-to-sales ratio: 1.6; Dividend yield: 5.3%; TSINetwork Rating: Above Average; www.bce.ca) is Canada’s largest provider of telephone, Internet and wireless services. The company’s main subsidiary, Bell Canada, has 6.3 million residential and business customers in Ontario and Quebec. BCE sells wireless services to 7.3 million subscribers across Canada. As well, it has 2.1 million high-speed Internet customers and 2.0 million TV subscribers. Through Bell Media, the company owns the CTV Television Network (28 TV stations), 29 specialty channels and 33 radio stations. It also owns 45% of Bell Aliant....

CANADIAN PACIFIC RAILWAY LTD. $55 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 169.4 million; Market cap: $9.3 billion; Price-to-sales ratio: 1.9; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.cpr.ca) transports freight between Montreal and Vancouver. It also connects with hubs in the U.S. Midwest and Northeast. CP gets 25% of its revenue from the U.S. In 2010, CP got 28% of its revenue by hauling shipping containers that contain a variety of goods. Another 23% of its revenue came from hauling grain, followed by consumer and industrial products (19%), coal (10%), fertilizers (10%), automotive products (6%) and forest products (4%). CP’s revenue rose 16.7%, from $4.6 billion in 2006 to $5.3 billion in 2008, as increasing trade with Asia pushed up freight volumes. CP’s 2008 purchase of Dakota, Minnesota & Eastern Railroad Corp. (DM&E) for $1.5 billion also added to its revenue. DM&E operates a 4,000-kilometre rail network in eight midwestern states....

One of the Canadian stocks the members of our Inner Circle have asked about more than once is popular athletic wear company lululemon. Here’s my response to the latest question on the stock that positioned itself as a “lifestyle educator.” Q: Hi Pat: I am interested in your take on lululemon. Thanks. A: lululemon athletica Inc., symbol LLL on Toronto, is a Vancouver-based designer and seller of yoga-inspired athletic wear and accessories. Part of its brand image is that it doesn’t capitalize the first letters in the words making up its corporate name....

CRITICALCONTROL SOLUTIONS, symbol CCZ on Toronto, sells services and software that help businesses better manage, access and store their information. CriticalControl gets about 60% of its revenue from clients in the oil and gas industry, followed by government (20%), health care (10%) and finance and retail (10%). The company also makes traditional dry flow meters for natural gas wells, and electronic flow measurement devices (EFMs) for shale-gas drilling. In the three months ended June 30, 2011 CriticalControl’s revenue fell 2.0%, to $12.5 million from $12.8 million a year earlier. Revenue at the tech stock’s Service Bureau Operations division rose 11%, while revenue rose 4% at the Canadian Energy Services division....

The best way to profit in the stock market in times of volatility is to stick with the high-quality stocks we recommend. These stocks generally bounce back faster when the stock market rebounds. Here are nine key factors that we always take into account when we do the stock research to uncover high-quality investments. Financial factors:

• 5 to 10 year history of profit. Companies that make money regularly are safer than chronic or even occasional moneylosers.
• 5 to 10 years of dividends. Companies can fake earnings, but dividends are cash outlays. Our stock research has proved time and again that if you only buy dividend-paying stocks, you’ll avoid most frauds.
• Manageable debt. When bad times hit, debt-heavy companies go broke first.

...

H.J. Heinz Co., symbol HNZ on New York, continues to see strong demand for its foods in China, Brazil and other fast-growing markets. The company now gets 70% of its sales from outside the U.S. Heinz is one of the stocks we analyze in Wall Street Stock Forecaster, our newsletter for U.S.A. stock market investing. Strong demand from overseas markets pushed up Heinz’s sales by 14.9% in the three months ended July 27, 2011, to $2.8 billion from $2.5 billion a year earlier. Emerging markets accounted for 23% of sales, up from 18% a year earlier. The company also raised its selling prices to offset rising ingredient costs....

Investment advice: The right number of stocks for you to own depends in part on where you are in your investing career. When you’re starting out

Toromont Industries Ltd., symbol TIH on Toronto, is a distributor of a broad range of Caterpillar and industrial equipment. As well, its CIMCO division makes refrigeration systems. Toromont is one of the growth stocks we analyze in Stock Pickers Digest. In the three months ended June 30, 2011, this Canadian stock pick’s revenue rose 9.3% to $344.6 million from $315.3 million a year earlier, due to higher new equipment sales and increased rental revenue....

All resource stocks are subject to the risk that comes with the rise and fall of commodity prices. But, depending on where they do business, some also face a second challenge: political risk. Among Canadian mining stocks, Sherritt International (Toronto symbol S) is prominently identified with political risk due to its extensive involvement in Cuba. The company’s Cuban operations are profitable, but it is expanding into other countries to lessen that risk. Sherritt is a diversified natural resource company that produces nickel, cobalt, thermal coal, oil and gas. It also manages 376 megawatts of power-generation capacity in Cuba....

When we’re looking for stocks to recommend in our newsletters and investment services, our stock market research puts a lot of importance on the amount of goodwill that a company carries as an asset on its balance sheet. Goodwill is an accounting entry that reflects the price that the company paid for its acquisitions, minus the value of the tangible assets, like land and equipment, that it received as part of the acquisition. The term means “value as a going concern.” However, goodwill acquired in an unwise acquisition can lose value overnight. When that happens, the company has to write it off against earnings. At worst, the company might have to write off most, if not all, of its goodwill....

Stantec, Inc., symbol STN on Toronto, sells a range of consulting, project delivery, design/build and technology services. The company’s clients operate in a number of markets, including industry, environment, transportation and construction. Stantec is one of the growth stocks we analyze in Stock Pickers Digest. The company has over 11,000 employees in 170 locations throughout North America. It also has four international offices....

We receive lots of interesting questions from members of our Inner Circle service. Many zero in on individual stocks, wanting to know whether or not a particular company is a good stock market investment. This week, we answered a question on a stock with a well-known name. Q: Hi Pat and team: Can you please tell me your take on Costco? Your advice makes for great bedtime reading in our house! A: Costco Wholesale Corp., symbol COST on Nasdaq (Shares outstanding: 443.6 million; Market cap: $33.2 billion; www.costco.com), owns and operates warehouse-sized stores that sell a wide variety of consumer goods. It also sells merchandise online....

BANK OF NOVA SCOTIA $54.53 (Toronto symbol BNS: Shares outstanding: 1.1 billion; Market cap: $58.1 billion; TSINetwork Rating: Above Average; Div. yield: 3.8%, www.scotiabank.com) is the third largest of Canada’s five big banks, with assets of $567.7 billion. Excluding one-time items, the bank earned $1.14 a share in the quarter ended July 31, 2011. That’s up 16.3% from $0.98 a share a year earlier. The bank continues to set aside less money to cover bad loans because of the improving economy. Loan-loss provisions fell 12.0%, to $243 million from $276 million a year earlier. The Canadian banking division’s earnings rose just 4.1%, due to strong competition for depositors. However, the international-banking division’s earnings jumped 20.7%, thanks to strong demand for business and consumer loans. As well, Bank of Nova Scotia recently bought Uruguay’s fourth-largest private bank, and this acquisition also contributed to the higher earnings....

VANGUARD EMERGING MARKETS ETF $43.93 (New York symbol VWO; buy or sell through brokers) aims to track the MSCI Emerging Markets Index, which is made up of common stocks of companies located in emerging markets around the world. The fund has an MER of 0.22%. The fund’s top holdings are Petroleo Brasileiro SA (Brazil: oil and gas), Vale SA (Brazil: mining), Samsung Electronics (South Korea: electronics), Gazprom (Russia: gas utility), China Mobile (China: wireless), Taiwan Semiconductor (Taiwan: computer chips), America Movil SAB de CV (Latin America: wireless), Itau Unibanco Holding SA (Brazil: banking), Industrial & Commercial Bank of China, and CNOOC Ltd. (China: oil and gas). The $65.0-billion Vanguard Emerging Markets ETF’s breakdown by country is as follows: China (17.4%), South Korea (15.2%), Brazil (15.1%), Taiwan (10.9%), South Africa (7.4%), India (7.3%), Russia (7.1%), Mexico (4.4%), Malaysia (3.2%), Indonesia (2.8%), Thailand (1.9%), Poland (1.7%), Chile (1.6%), Turkey (1.3%), Colombia (0.6%), Philippines (0.6%), Peru (0.5%), Czech Republic (0.4%), Hungary (0.4%) and Egypt (0.2%)....

VANGUARD GROWTH ETF $60.58 (New York symbol VUG; buy or sell through brokers) aims to track the MSCI U.S. Prime Market Growth Index, a broadly diversified index that mainly consists of stocks of large U.S. companies. The fund has an MER of just 0.14%. The $21.0-billion fund’s top holdings are Apple Inc., IBM, Google, Coca-Cola, Microsoft, Philip Morris International, Oracle Corp., Schlumberger, Wal-Mart and PepsiCo. Vanguard Growth ETF is broken down by economic segment as follows: Information Technology (29.3%), Consumer Discretionary (17.0%), Consumer Staples (12.3%), Energy (10.9%), Industrials (11.1%), Health Care (10.9%), Financials (4.8%), Materials (4.5%), Telecommunication Services (0.7%) and Utilities (0.2%)....

Pason Systems, symbol PSI on Toronto, rents equipment that its customers use to monitor and manage land-based oil rigs. Pason is one of the technology stocks we analyze in Stock Pickers Digest, our newsletter that recommends stocks for the part of your portfolio you devote to aggressive investing. It also provides communication systems, such as its satellite system, which companies use to remotely collect data from their drilling operations. Pason serves oil and gas companies and drilling contractors throughout Canada, the U.S., Mexico and Argentina....

The state of the U.S. economy continues to worry many investors. Some are wondering if they should dump their U.S. stocks for fear that the U.S. stock market will move further down due to rising debt and unproductive government policies. We think this would be a mistake. In fact, our investment advice is that you should keep at least one fifth of your portfolio in U.S. stocks. Here’s why. The troubles that have stirred markets recently – like the downgrade in the U.S. debt rating – are much different from great house-price collapse in the U.S. in 2007-2009. Today there is no boom that could deflate and bring down the economy....

IAMGold, symbol IMG on Toronto, owns 38% of the Sadiola mine and 40% of the Yatela mine, both located in Mali; 100% of the Mupane gold mine in Botswana, 90% of the Essakane gold mine in Burkina Faso; 100% of the Doyon mine in Quebec; and 100% of the Rosebel mine in Suriname, South America. We analyze IAMGold in Stock Pickers Digest, our newsletter that recommends stocks (including gold mining stocks) for the part of your portfolio you devote to aggressive investing. IAMGold also owns the Niobec niobium mine in Quebec, and has a 1% royalty interest in the Diavik diamond mine in the Northwest Territories....

Some investors rely on technical analysis (or chart reading) when they’re picking stocks. That’s because relying on charts seems much simpler