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
CANADIAN TIRE CORP., $120.92, Toronto symbol CTC.A, hit a new all-time high of $121.66 this week after announcing a new three-year growth plan. The company’s strategy mainly involves building new stores, upgrading existing ones and expanding its e-commerce businesses. It will spend $575 million a year on these initiatives from 2015 to 2017. To put that in context, Canadian Tire earned $169.9 million, or $2.12 a share, in the quarter ended June 28, 2014. The company feels these improvements will increase annual sales by 3% at its Canadian Tire stores, 5% at the Mark’s casual clothing chain and 9% at its sporting goods stores, including Sport Chek. It also expects its earnings per share to rise 8% to 10% each year over the next three years....
Ottawa continues to encourage the formation of a fourth national wireless carrier to compete with market leaders Rogers, Telus and BCE. As a result, regulators have restricted these three from buying new radio frequencies, or spectrum. They may also force them to lease space on their networks to smaller competitors at heavily discounted rates. We feel Telus’s ongoing network investments and new customer-friendly service plans will keep attracting wireless users, despite a potential new rival. That will help it offset falling demand for traditional phone services and give it more room for dividend hikes and share buybacks. TELUS CORP. $39 (Toronto symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 615.5 million; Market cap: $24.0 billion; Price-to-sales ratio: 2.1; Dividend yield: 3.9%; TSINetwork Rating: Above Average; www.telus.com) is Canada’s second-largest wireless carrier, after Rogers Communications, with 7.9 million subscribers. Wireless now supplies 54% of Telus’s revenue and 66% of its earnings....
FORTIS INC. $35 (Toronto symbol FTS; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 215.4 million; Market cap: $7.5 billion; Price-to-sales ratio: 1.6; Dividend yield 3.7%; TSINetwork Rating: Above Average; www.fortis.ca) is the main electricity supplier in Newfoundland and P.E.I. It also distributes natural gas in B.C. and operates power plants in other parts of Canada, the U.S. and the Caribbean. The company recently completed its purchase of UNS Energy Corp., which operates power plants and distributes electricity and natural gas to 657,000 customers in Arizona. Fortis paid $4.5 billion U.S., which includes assuming $2.0 billion U.S. of UNS’s debt. The new operations will add $1.5 billion U.S. to Fortis’s annual revenue of $4.7 billion (Canadian). The purchase also lowers Fortis’s reliance on Atlantic Canada....
These two telecom firms face the same regulatory hurdles as Telus (see page 101). But like Telus, they’re improving their services while keeping their operating costs down. That will let them both maintain their high dividend yields, but we prefer BCE for its greater geographic reach. BCE INC. $48 (Toronto symbol BCE; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 827.7 million; Market cap: $39.7 billion; Price-to-sales ratio: 1.8; Dividend yield: 5.1%; TSINetwork Rating: Above Average; www.bce.ca) is Canada’s largest provider of telephone services, with 5.0 million customers in Ontario and Quebec. It also has 2.2 million high-speed Internet customers and 2.3 million TV subscribers. BCE also sells wireless services to 7.8 million customers across Canada, and its Bell Media segment owns CTV Television, specialty channels and radio stations....
TRANSCANADA CORP. $56 (Toronto symbol TRP; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 707.9 million; Market cap: $39.6 billion; Price-to-sales ratio: 3.8; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.transcanada.com) recently completed the purchase of three more Ontario solar power plants from Canadian Solar Inc. (Nasdaq symbol CSIQ). TransCanada now owns seven of the nine solar farms it agreed to buy from Canadian Solar in 2011. It will probably take possession of the remaining two in 2015. In all, it will pay about $500 million. To put that in context, TransCanada earned $332 million, or $0.47 a share, in the three months ended June 30, 2014. The company has 20-year deals to sell the power from these solar farms, which cuts this investment’s risk....
LINAMAR CORP. $57 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.8 million; Market cap: $3.7 billion; Price-to-sales ratio: 0.9; Dividend yield: 0.7%; TSINetwork Rating: Average; www.linamar.com) has agreed to buy California Forge Co.’s highvolume hot-forging business. It is also buying 66% of Germany’s Seissenschmidt AG, which also specializes in hot forging. These purchases will improve Linamar’s ability to make specialized parts, such as gears, wheel bearings, hubs and sprockets. That will make its transmissions and powertrains perform better by cutting noise, vibration and excess weight. The company didn’t say how much it is paying for these businesses. However, they should add $450 million to its annual sales of $4.0 billion....
Loblaw and Metro (see next article) are dealing with competition from U.S. retailers like Wal-Mart and Target in different ways: Loblaw has increased its market share by acquiring Shoppers Drug Mart, while Metro aims to make its existing stores more profitable. Both strategies should pay off. LOBLAW COMPANIES LTD. $56 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 413.5 million; Market cap: $23.2 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.loblaw.ca) is Canada’s largest food retailer, with about 1,200 stores. Its banners include Loblaws, Provigo, Fortinos, Real Canadian Superstore and No Frills. In March 2014, Loblaw bought the 1,250-store Shoppers Drug Mart chain for $12.3 billion in cash and stock....
METRO INC. $75 (Toronto symbol MRU; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 85.1 million; Market cap: $6.4 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.6%; TSINetwork Rating: Average; www.metro.ca) operates 600 grocery stores and 250 drugstores in Quebec and Ontario. In its fiscal 2014 third quarter, which ended July 5, 2014, Metro earned $144.5 million, unchanged from a year earlier. The company spent $147.2 million on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share gained 9.4%, to $1.63 from $1.49. Sales rose 1.4%, to $3.62 billion from $3.57 billion. Same-store sales gained 1.0%. The company continues to benefit from the recent reorganization of its Ontario operations, including converting certain Metro outlets to the discount Food Basics banner....
Torstar has struggled in the past few years as more people get their news from the Internet, rather than newspapers. Meanwhile, Pengrowth (see box) has also suffered as rising North American shale production has cut oil and gas prices. The resulting share-price declines are why both companies’ dividend yields appear so high. But both are doing a good job of responding to their challenges, which should let them improve their earnings and maintain their current payouts. TORSTAR CORP. $7.11 (Toronto symbol TS.B; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 80.1 million; Market cap: $569.5 million; Price-to-sales ratio: 0.5; Dividend yield: 7.4%; TSINetwork Rating: Average; www.torstar.com) publishes the Toronto Star, Canada’s largest daily newspaper by circulation. It also publishes three other daily papers and over 100 weeklies....
PENGROWTH ENERGY CORP. $5.02 (Toronto symbol PGF; Aggressive Growth and Income Portfolios, Resources sector; Shares outstanding: 528.1 million; Market cap: $2.7 billion; Price-to-sales ratio: 2.0; Dividend yield: 9.6%; TSINetwork Rating: Average; www.pengrowth.com) is shifting away from its traditional oil and natural gas operations and into projects with better long-term potential, such as its Lindbergh oil sands development in Alberta’s Cold Lake region. Pengrowth is spending $630 million on Lindbergh’s first phase, which should start up in early 2015 and produce 12,500 barrels a day. That’s equal to 16.9% of Pengrowth’s second quarter output of 73,823 barrels a day (56% oil and natural gas liquids, 44% natural gas). Future phases will raise the project’s daily production to 50,000 barrels by 2020. Lindbergh’s reserves should last 25 years. The company’s cash flow per share will probably fall from $1.09 in 2013 to $1.01 in 2014. However, it should improve to $1.38 in 2015. The stock trades at a low 3.6 times that forecast. Pengrowth’s improving cash flow should also let it keep paying monthly dividends of $0.04 a share, for an 9.6% annualized yield....