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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Dividend Stocks Library Archive
Canada’s big five banks have fallen out of favour in the past few weeks, for two main reasons. First, the Bank of Canada unexpectedly cut its benchmark interest rate. While lower rates should spur loan demand, banks will earn less interest income on these new loans. Moreover, the banks may have to increase the rate they pay to attract depositors, which would squeeze their profit margins. In addition, investors fear that lower oil prices could force oil producers to default on their loans. Layoffs in the sector could also lead to higher credit losses in Alberta....
In the next few weeks, we will unveil a major upgrade to our website, TSI Network (www.tsinetwork.ca). We launched the current website in 2009 to host our four newsletters (Canadian Wealth Advisor, Stock Pickers Digest, The Successful Investor and Wall Street Stock Forecaster), as well as over 2,000 articles on individual investments. The current site served its purpose, but it’s time to move ahead with an advanced redesign. So we are building a new site with significant upgrades for our subscribers....
TD (see page 31) and Bank of Nova Scotia are our top picks among Canada’s big five banks right now, due to their wide international exposure. But we still like the prospects of Royal Bank, Bank of Montreal and CIBC. All three are well positioned to weather any downturn in the Canadian economy. They also trade at attractive multiples to earnings and continue to raise their dividends. ROYAL BANK OF CANADA $76 (Toronto symbol RY; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.4 billion; Market cap: $106.4 billion; Price-to-sales ratio: 3.2; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.rbc.com) recently said it would buy City National (New York symbol CYN)....
GREAT-WEST LIFECO INC. $35 (Toronto symbol GWO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 996.7 million; Market cap: $34.9 billion; Price-to-sales ratio: 0.9; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) is paying an undisclosed sum for the Irish operations of Legal & General Group plc. This business provides investment and tax-planning services to wealthy individuals. It looks like a nice fit with Irish Life, a leading insurance firm Great-West acquired in 2013. Thanks to Irish Life’s contribution and savings from eliminating duplicate functions, Great-West’s earnings jumped 34.7% in the three months ended December 31, 2014, to $0.66 a share from $0.49 a year earlier. Revenue rose 33.1%, to $10.7 billion from $8.1 billion. The company has also raised its quarterly dividend by 6.0%, to $0.3260 a share from $0.3075. The new annual rate of $1.30 yields 3.7%....
SNC-LAVALIN GROUP INC. $38 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 152.5 million; Market cap: $5.8 billion; Price-to-sales ratio: 0.7; Dividend yield: 2.6%; TSINetwork Rating: Average; www.snclavalin.com) earned $106.7 million in the fourth quarter of 2014, up 0.6% from $106.1 million a year earlier. Earnings per share were unchanged at $0.70. These figures exclude a gain on the sale of AltaLink, which operates power lines in Alberta. Revenue jumped 32.7%, to $2.8 billion from $2.1 billion, due to the recent acquisition of U.K.-based Kentz, which provides engineering and construction services to the oil and gas industry. The stock has suffered lately, mainly due to formal charges against the company for using bribes to win construction contracts in Libya between 2001 and 2011. These are the same allegations that prompted SNC to replace its senior executives in 2012 and bring in a new program to enforce ethical practices....
LOBLAW COMPANIES LTD. $61 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 412.5 million; Market cap: $25.2 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.6%; TSINetwork Rating: Above Average; www.loblaw.ca) reported that its sales jumped 49.4% in the three months ended January 3, 2015, to $11.4 billion from $7.6 billion a year earlier. The gain is mainly due to the Shoppers Drug Mart drugstore chain, which Loblaw bought in March 2014. Same-store sales rose 3.3% at Loblaw’s supermarkets and 3.8% at Shoppers. Excluding integration costs and other unusual items, earnings jumped 146.0%, to $396 million from $161 million. Per-share profits gained 68.4%, to $0.96 from $0.57, on more shares outstanding....
Finning and Precision Drilling (see box) supply vital equipment and services to resource firms. Both stocks have suffered in the past few months, as slumping prices for oil and other commodities have hurt their revenue and earnings. However, both companies are well-established leaders, which will help them hang on to clients until resource prices rebound. We still like both, but only aggressive investors should consider Precision. FINNING INTERNATIONAL INC. $24 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 172.4 million; Market cap: $4.1 billion; Price-to-sales ratio: 0.6; Dividend yield: 3.0%; 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 heavy equipment made by other firms. Finning’s clients are mainly in the mining, forest products and construction industries....
PRECISION DRILLING CORP. $7.69 (Toronto symbol PD; Aggressive Growth Portfolio, Resource sector; Shares outstanding: 292.8 million; Market cap: $2.3 billion; Price-to-sales ratio: 0.9; Dividend yield: 3.6%; TSINetwork Rating: Extra Risk; www.precisiondrilling.com) plans to spend $467.0 million on capital upgrades in 2015, down 38.1% from $754.9 million in 2014. That’s because lower oil prices have prompted producers to curtail drilling, hurting demand for new rigs. Even with the lower capital spending, Precision expects to deliver 17 new rigs in 2015 (13 for the U.S., three for Canada and one for Kuwait), up from 15 in 2014. The company has already signed agreements with drillers to operate these rigs, which cuts the risk of these projects. Due to the drop in oil prices and drilling activity, Precision will probably earn just $0.11 a share in 2015. The stock trades at 69.9 times that depressed estimate. However, Precision’s earnings could recover to $0.25 a share in 2016, and it trades at a more reasonable 30.8 times that forecast....
BCE INC. $53 (Toronto symbol BCE; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 840.5 million; Market cap: $44.5 billion; Price-to-sales ratio: 2.1; Dividend yield: 4.9%; TSINetwork Rating: Above Average; www.bce.ca) has signed a new deal with Sun Life Financial (Toronto symbol SLF) that will cut some of the risk in its Bell Canada employees’ pension plan. Retired employees currently receive a monthly payment for the rest of their lives. However, many of these pensioners are living longer than expected, which is increasing BCE’s pension obligations. Under this new deal, BCE will pay monthly premiums to Sun Life, which will then make monthly payments into the plan for the lifetime of existing pensioners....
LINAMAR CORP. $75 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 65.1 million; Market cap: $4.9 billion; Price-to-sales ratio: 1.2; Dividend yield: 0.5%; TSINetwork Rating: Average; www.linamar.com) saw its sales rise 16.0% in 2014, to a record $4.2 billion from $3.6 billion in 2013. Sales at its powertrain and driveline division (83% of the total) rose 14.7%, thanks to acquisitions and higher new car sales, which increased demand for Linamar’s transmissions and other auto parts. Sales at the industrial products division (17%) gained 23.3%, mainly due to strong demand for the company’s Skyjack selfpropelled, scissor-type elevating work platforms. Earnings jumped 48.2% during the year, to a record $4.95 a share from $3.34. Linamar’s earnings could rise to $5.54 a share in 2015, and the stock trades at a moderate 13.5 times that forecast. The $0.40 dividend yields 0.5%....