canadian dividend
TIM HORTONS INC. $32 (New York symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 189.7 million; Market cap: $6.1 billion; WSSF Rating: Extra risk) operates over 2,700 coffee-and-donut shops in Canada, and 340 in the United States. Franchisees operate 97% of its stores. The company was a wholly owned subsidiary of Wendy’s International Inc. up until April 2006. That’s when it sold shares to the public at $23.162 each. In October, Wendy’s handed out its remaining Tim Hortons stock as a tax-deferred dividend. Investors received 1.3542759 shares for every Wendy’s share held....
Fast-food stocks have been among our biggest gainers since the 2002 stock market slump. Despite increasing concerns over nutritional content, Americans are eating more of their meals outside of the home. Fast-food is also an increasingly affordable luxury in developing countries. However, rising gas prices could cut customer traffic and put a damper on profit growth. Rising food and labor costs will also squeeze margins. We designed our system to zero in on fast-food companies whose strong brands and market share will help them overcome these setbacks. Here are three top examples....
ABERDEEN ASIA-PACIFIC INCOME INVESTMENT $8.95 (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. The fund has net assets of $419.6 million. Its units now trade at a 2% discount to net asset value. Aberdeen Asia-Pacific pays a monthly dividend of $0.06 a unit for a high current yield of 8.1%. Note that these dividends do not qualify for the Canadian dividend tax credit. They are not subject to any withholding taxes, however. Higher yields almost always mean higher risk. With Aberdeen, that’s because there is a currency risk from investing in Australian and U.S. bonds. As well, it can invest up to 35% of its portfolio in Asian bonds. Right now it has 20.3% of its assets in Asian currency bonds....
RBC CANADIAN DIVIDEND FUND $48.90 (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 41.4% of its portfolio in Financial services stocks. It has a further 15.9% in Energy stocks. The $8.5 billion RBC Canadian Dividend Fund’s top stock holdings are Royal Bank of Canada, Bank of Nova Scotia, TD Bank, Manulife Financial, CIBC, TransCanada Corporation, Bank of Montreal, Canadian National Railway and Power Corporation. Over the last five years, RBC Canadian Dividend Fund has posted a 13.5% annual rate of return. That’s just over the S&P/TSX 60’s gain of 13.4% over the same period. The fund gained 10.6% over the last year, compared to the S&P/TSX 60’s gain of 15.0%. RBC Canadian Dividend’s MER is 1.72%....
BMO Dividend and Royal Dividend hold mostly high-quality stocks. These stocks sometimes run into deep 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....
ABERDEEN ASIA-PACIFIC INCOME INVESTMENT $7.98 (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. The fund has net assets of $559.2 million. The fund units now trade at a 6% discount to net asset value. Aberdeen Asia-Pacific pays a monthly dividend of $0.06 a unit for a high current yield of 9.0%. Note that these dividends do not qualify for the Canadian dividend tax credit. They are not subject to any withholding taxes, however. Higher yields almost always mean higher risk. With Aberdeen, that’s because there is a currency risk from investing in Australian and U.S. bonds. As well, it can invest up to 35% of its portfolio in Asian bonds. Right now it has 25.2% of its assets in Asian currency bonds....
With their first budget, the Conservatives are increasing the federal dividend tax credit on Canadian dividend income. If fully matched by the provinces, this will lower taxes on dividends by about five percentage points for top income earners. That means you’ll pay less tax on dividend income than on capital gains. However, that would make it more advantageous for investors to seek less risky dividends in place of risker capital gains. Just as dividends are taxed at a lower rate than lower-risk interest income, it stands to reason that in a future budget, the Conservatives will introduce measures to lower taxes on capital gains. This could take the form of deferring the capital gains tax for individuals on the sale of assets when the proceeds are reinvested within six months, as proposed in the election campaign....
The Conservative minority government of Stephen Harper plans to make tax changes that will affect Canadians for the better. During the election campaign, the Conservatives proposed the elimination of the capital gains tax for individuals on the sale of assets when the proceeds are reinvested within six months. This includes assets such as family cottages, as well as stocks. Our view is that the capital-gains proposal is a great idea, but it needs a lot of work. Otherwise, tax-shelter promoters will figure out ways to convert risk-free interest income into tax-deferred capital gains....
NOVA CHEMICALS CORP. $44 (Toronto symbol NCX; SI Rating: Extra risk) makes two types of industrial plastics. Ethylene/polyethylene, which accounts for 60% of its revenues, is used to make a variety of products such as packaging, plastic bags, appliances, electronics and plastic pipe. The other 40% of Nova’s revenue comes from polystyrene products, such as foam cups, plates and bowls. North America supplies 80% of its revenue. Nova needs large amounts of crude oil and natural gas to make its products, which leaves it vulnerable to rising oil and gas prices. This plus its heavy reliance on just two common industrial plastics would ordinarily limit our interest.