canadian dividend

Technology companies operate in a highly competitive and cyclical industry, so they must continue to invest heavily in research and marketing. We aim to cut tech stock risk by focusing on companies with distinct competitive advantages, such as proprietary technology, broad geographic reach and a wide client base. These advantages should help these three techs weather the inevitable downturns, and thrive when conditions improve. 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....

NOVA CHEMICALS CORP. $28 (Toronto symbol NCX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 83.1 million; Market cap: $2.3 billion; SI Rating: Extra risk) earned a record $4.16 a share in 2007, compared to a loss of $8.52 in 2006 (all amounts except share price and market cap in U.S. dollars). The 2006 loss included a $9.35 a share restructuring charge. Nova’s proximity to Alberta’s large natural gas reserves keeps its input costs low. The company is also enjoying the benefits of recent upgrades to its plants. Revenue rose 3.1%, to $6.7 billion from $6.5 billion, on higher volumes and prices. Nova will probably earn $4.16 U.S. in 2008, and the stock trades at just 6.7 times that figure. The $0.40 (Canadian) dividend yields 1.4%. Nova Chemicals is a buy.

RBC CANADIAN DIVIDEND FUND $44.84 (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 38.1% of its portfolio in Financial services stocks. It has a further 14.4% in Energy stocks and 8.5% 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, TransCanada Corporation, Bank of Montreal, BCE Inc. and Power Corporation. Over the last five years, RBC Canadian Dividend Fund has posted a 14.9% annual rate of return. That’s less than the S&P/TSX’s gain of 18.3% over the same period....

BMO Dividend and RBC Canadian Dividend hold mostly high-quality stocks. These 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. 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....

RBC CANADIAN DIVIDEND FUND $44.84 (RBC Mutual 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 38.1% of its portfolio in financial-services stocks. It has a further 14.4% in energy stocks and 8.5% 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, TransCanada Corporation, Bank of Montreal, BCE Inc. and Power Corporation. Over the last five years, RBC Canadian Dividend Fund has posted a 14.9% annual rate of return. That’s less than the S&P/TSX’s gain of 18.3% over the same period....

NOVA CHEMICALS CORP. $31 (Toronto symbol NCX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 83.1 million; Market cap: $2.6 billion; SI Rating: Extra risk) makes two types of industrial plastics. Ethylene/polyethylene is used in a wide variety of products, such as plastic bags, automotive parts, appliances and electronics. This business supplies 60% of Nova’s revenue. The remaining 40% comes from styrene products such as foam cups. Nova is riskier than most stocks on our Conservative Growth Portfolio. It’s highly cyclical and needs large amounts of crude oil and natural gas to make its products, which exposes it to rising energy prices.

Low costs give Nova an edge

However, Nova has several advantages over its competitors. Its ethylene/polyethylene plant in Joffre, Alberta is the world’s largest, and economies of scale help keep its operating costs low. The proximity to Alberta’s large natural gas reserves also helps keep input costs down....

ABERDEEN ASIA-PACIFIC INCOME INVESTMENT $7.10 (Toronto symbol: FAP) (CWA Rating: Income) is a closed-end fund that invests mainly in Australian debt instruments. It also invests in U.S. dollar denominated bonds of Asian countries and in Asian bonds. Right now it has 26.2% of its assets in Asian currency bonds. The fund has net assets of $541.7 million. Its units now trade at an 8% discount to net asset value. Aberdeen Asia-Pacific pays a monthly dividend of $0.06 a unit for a high current yield of 10.1%. Note that these dividends do not qualify for the Canadian dividend tax credit. They are not subject to any withholding taxes, however....

NOVA CHEMICALS CORP. $37 (Toronto symbol NCX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 82.7 million; Market cap: $3.1 billion; SI Rating: Extra risk) is studying a plan to extract ethane from excess natural gas at Alberta’s oil sands projects. Nova’s close proximity to gas suppliers in Alberta gives it an advantage over other plastics producers. This new project could further lower its input costs. The stock got as high as $44 in July, partly due to takeover rumours. However, it operates in an economically sensitive industry. For example, the stock fell recently to $34 on fears that the problems in U.S. housing markets would hurt spending and economic growth. The stock now trades at 13.3 times the $2.67 U.S. a share Nova should earn in 2007, and at just 7.9 times its forecast cash flow of $4.52 U.S. a share. The $0.40 (Canadian) dividend yields 1.1%....

RBC CANADIAN DIVIDEND FUND $49.82 (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 43.8% of its portfolio in Financial services stocks. It has a further 16.9% in Energy stocks and 8.1% in Materials. The $8.9 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, TransCanada Corporation, Bank of Montreal, BCE Inc. and Suncor Energy. Over the last five years, RBC Canadian Dividend Fund has posted a 15.8% annual rate of return. That’s less than the S&P/TSX’s gain of 18.4% over the same period....

BMO Dividend and RBC Canadian Dividend hold mostly high-quality stocks. These 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. 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....