canadian dividend
Starting in 2009, Ottawa’s new Tax-Free Savings Accounts (or TFSAs) will let you earn investment income — including interest, dividends and capital gains — tax free. The new accounts are open to Canadian residents who are at least 18 years old and have filed at least one tax return.
A nice complement to RRSPs
Unlike RRSP contributions, TFSA contributions DON’T give you a tax deduction. But you pay NO tax on TFSA withdrawals. You’ll have a maximum you can contribute each year, regardless of income. It will consist of the sum of these three amounts:...
We think investors will profit most — and with the least risk — by buying shares of well-established, dividend-paying companies with sound business prospects. These are companies that have strong positions in a healthy industry. They also have strong management that will make the right moves to remain competitive in a changing marketplace. A well-established company with a long-term record of dividends provides a measure of safety for investors. Dividends, after all, are much more stable than earnings projections. More important, dividends are impossible to fake — either the company has the cash to pay dividends, or it doesn’t. That’s not to say that there won’t be surprises that affect every company in a particular industry. But well-established, dividend-paying stocks have the asset size and the financial clout — including solid balance sheets and strong cash flow — to weather market downturns or changing industry conditions....
GREAT-WEST LIFECO INC. $28 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 894.4 million; Market cap: $25.0 billion; SI Rating: Above average) holds $101 million of fixed-income securities issued by Lehman Brothers, which declared bankruptcy in September, 2008. The company also holds $347 million of securities linked to troubled U.S.-based AIG (American International Group), plus $2.1 million of fixed-income securities of Washington Mutual Inc. Great-West will record an undisclosed charge against its third quarter earnings to reflect the decline in value of these investments. However, the company’s total exposure of $450.1 million is minimal next to its total assets of $131.3 billion, or equity of $12.4 billion. Great-West may also take advantage of the current crisis to buy promising operations at bargain prices. As one of our recommended Canadian dividend stocks, Great-West Lifeco is a buy....
GENNUM CORP. $6.65 (Toronto symbol GND; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.6 million; Market cap: $236.7 million; SI Rating: Above average) makes equipment that lets broadcasters store, manipulate and transport video signals without losing picture quality. This business accounts for 80% of Gennum’s total sales. The remaining 20% comes from making chips that improve the speed and reliability of transmissions in computer networks. The company continues to enjoy the benefits of its recent restructuring, which included selling its slow-growing hearing aid and headset businesses. In its third fiscal quarter ended August 31, 2008, it earned $0.18 a share (total $6.4 million) compared to a loss of $0.04 a share ($1.5 million) a year earlier (all amounts except share price and market cap in U.S. dollars). However, the year-earlier quarter included a $0.04 a share ($6.8 million) loss from discontinued operations. Sales in the quarter rose 31.4%, to $33.5 million from $25.5 million, partly due to an acquisition. Gennum also continues to successfully launch new products. Research spending in the latest quarter rose to 28.1% of sales, up from 22.4% a year earlier....
Stocks in our Aggressive Portfolio, such as these four, tend to be more highly leveraged and more volatile than those in our Conservative Growth or Income-Seeking Portfolios. These four also operate in the Manufacturing sector, which is generally more risky than, say, Utilities. As well, they serve narrow markets or cyclical industries. Due to the recent stock market turmoil, many investors will consider selling stock from their aggressive portfolio. We feel you should resist the urge to sell high-quality companies, even if they are in your aggressive portfolio, just because you feel they could go lower. We still have a high opinion of these four companies from our Aggressive Portfolio, and they should all rebound strongly as the economy improves. However, only three are buys right now. GENNUM CORP. $6.65 (Toronto symbol GND; Aggressive Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.6 million; Market cap: $236.7 million; SI Rating: Above average) makes equipment that lets broadcasters store, manipulate and transport video signals without losing picture quality. This business accounts for 80% of Gennum’s total sales. The remaining 20% comes from making chips that improve the speed and reliability of transmissions in computer networks....
RBC CANADIAN DIVIDEND FUND $46.18 (RBC Funds, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-800-463-3863; Web site: www.royalbank.com. No load — deal directly with the bank) has 43.5% of its portfolio in Financial services stocks. It has a further 19.4% in Energy stocks and 6.5% in Consumer discretionary. The $9.6 billion RBC Canadian Dividend Fund’s top stock holdings are Royal Bank of Canada, Bank of Nova Scotia, Toronto-Dominion Bank, Manulife Financial, Canadian Imperial Bank of Commerce, EnCana Corporation, Bank of Montreal, Sun Life Financial and Power Corporation. Over the last five years, RBC Canadian Dividend Fund has posted a 13.1% annual rate of return. That’s less than the S&P/TSX’s gain of 18.2% over the same period....
BMO Dividend and RBC Canadian Dividend hold mostly high-quality stocks. Even high-quality stocks sometimes run into trouble and go through lengthy struggles, just like lesser investments. Eventually, though, most solve their problems and go on to thrive anew. Both funds hold a high proportion of their assets in financial services stocks. However, if you must focus on something, finance is a relatively stable sector, at least in Canada. If you do invest in these funds, be sure to adjust the rest of your portfolio so these funds won’t overly concentrate your holdings in the financial sector....
NOVA CHEMICALS CORP. $24 (Toronto symbol NCX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 83.1 million; Market cap: $2.0 billion; SI Rating: Extra risk) makes industrial plastics that manufacturers use to make a wide variety of products including auto parts, construction materials and packaging. Nova’s plant in Joffe, Alberta is the world’s largest producer of ethylene and polyethylene, and benefits from its proximity to Alberta’s large oil and gas reserves. The stock peaked at $43.70 in July 2007, but has dropped since due to fears that a slowing economy in the United States would hurt demand for its products. The U.S. accounts for roughly 45% of sales. Nova’s cyclical operations and exposure to volatile oil and gas prices adds risk. However, last year’s merger of its money-losing foam cup operations into a 50:50 joint venture cuts its costs....
Agrium and Nova use natural gas to make their products, and ready access to large gas reserves gives them a cost advantage over their competitors. However, only Nova is a buy at current prices. AGRIUM INC. $72 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 158.0 million; Market cap: $11.4 billion; SI Rating: Average) is a leading producer of fertilizers and crop protection products. The company uses natural gas to make ammonia, the basic ingredient in fertilizers. Most of Agrium’s facilities are near large gas suppliers in Alberta, which helps keep its input costs down. Agrium will soon close its fertilizer plant in Kenai, Alaska, since it couldn’t find a reliable source of natural gas for the plant. The company looked into a plan to convert coal to natural gas. However, Agrium feels the project’s $2 billion U.S. cost is too expensive. It earned $3.25 U.S. a share (total $441 million U.S.) in 2007....
GENNUM CORP. $9.05 (Toronto symbol GND; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.6 million; Market cap: $322.2 million; SI Rating: Above average) makes equipment that lets broadcasters store, manipulate and transport video signals without losing picture quality. This business accounts for 75% of Gennum’s total revenue. The company also makes chips for computer networks. Gennum recently completed a major realignment of its operations. It sold its slow-growing hearing aid and headset businesses, as well as part of its video chip operations. The company used the proceeds of around $25 million U.S. to finance its $25.3 million U.S. purchase of privately held Snowbush Microelectronics, a Toronto-based developer of technologies that help chip-makers improve the speed and reliability of data transmissions inside computers and other electronic devices. Snowbush’s expertise will help Gennum design better high-speed data and video chips....