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
Expanding by acquisition always adds risk. That’s because new businesses can come with hidden problems that delay or offset the extra revenue and savings they bring. Particularly severe problems could force the buyer to write down the value of the acquired assets. Buying companies in foreign markets adds even more risk, because it exposes the buyer to unpredictable currency moves and political uncertainty. However, when done right, foreign acquisitions can pay off for years to come, as the five companies below demonstrate....
BANK OF MONTREAL $84 (Toronto symbol BMO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 646.4 million; Market cap: $54.3 billion; Price-to-sales ratio: 2.6; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.bmo.com) earned $1.15 billion in the three months ended July 31, 2014, up 3.6% from $1.11 billion a year ago. Per-share earnings rose 4.2%, to $1.73 from $1.66, on fewer shares outstanding. Earnings from Canadian retail banking (43% of the total) rose 8.0%, as low interest rates spurred demand for mortgages and business loans. The U.S. retail banking division (14%) reported a 6.2% gain in profits, mainly due to improving business loan demand. The bank’s trading division (25%) saw its earnings rise 13.8% on higher volumes and more stock-underwriting deals. However, wealth management earnings (18%) fell 5.4%, due to a one-time charge at its insurance business....
CENOVUS ENERGY INC. $34 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 757.0 million; Market cap: $25.7 billion; Price-to-sales ratio: 1.2; Dividend yield: 3.1%; TSINetwork Rating: Average; www.cenovus.com) owns 50% of the Foster Creek and Christina Lake oil sands projects in Alberta; ConocoPhillips (New York symbol COP) owns the other 50%. The partners are now developing a third property called Narrows Lake. The project’s first phase should start up in 2017 and will add 22,500 barrels to Cenovus’s daily oil production, which averaged 201,688 barrels in the latest quarter. Cenovus is also developing two other 100%-owned oil sands projects: Telephone Lake and Grand Rapids. In all, these properties could produce up to 100,000 barrels a day....
BOMBARDIER INC. (Toronto symbols BBD.A $3.72 and BBD.B $3.67; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $6.2 billion; Price-to-sales ratio: 0.3; Dividend yield: 2.7%; TSINetwork Rating: Average; www.bombardier.com)had to ground its new CSeries passenger jet in May 2014 due to an engine malfunction. The engine’s manufacturer fixed the fault, and Bombardier has resumed test flights. The company has firm orders for 203 CSeries planes, plus options for an additional 310. If buyers exercise all of these options, the entire order of 513 aircraft would be worth roughly $34 billion U.S. That’s equal to 1.9 times Bombardier’s 2013 revenue....
Finning and Precision Drilling (see the next article in this issue) serve the cyclical resource sector, which adds risk. However, both are market leaders, so their customers are unlikely to switch to a competitor. As well, complex new technologies like hydraulic fracturing, or fracking, and steam-assisted gravity drainage should spur demand for their specialized gear and services....
PRECISION DRILLING CORP. $13 (Toronto symbol PD; Aggressive Growth Portfolio, Resource sector; Shares outstanding: 292.7 million; Market cap: $3.8 billion; Price-to-sales ratio: 1.7; Dividend yield: 1.8%; TSINetwork Rating: Extra Risk; www.precisiondrilling.comtarget="_blank”) provides contract drilling services to land-based oil and gas producers, mainly in North America. It operates 333 rigs. Higher oil and gas prices have spurred demand for Precision’s drilling services. As a result, revenue rose 25.4% in the second quarter of 2014, to $475.2 million from $378.9 million a year ago. However, the company lost $7.2 million, or $0.02 a share. Precision recently changed the way it calculates depreciation on its rigs, and the new method cut its earnings by $14 million, or $0.05 a share. A year earlier, it earned $473,000, or nil per share....
TELUS CORP. $40 (Toronto symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 615.5 million; Market cap: $24.6 billion; Price-to-sales ratio: 2.1; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.telus.com) continues to expand its health care division, which helps doctors, pharmacies and hospitals convert patient records and other information to electronic formats. The company recently paid an undisclosed sum for ZRx Prescriber, an app that lets doctors write prescriptions through their tablet computers and smartphones. The app can also access a patient’s drug insurance information, which speeds up claims and cuts down on errors. Over 520 clinics in Ontario and Quebec use ZRx Prescriber to process 400,000 prescriptions a month. Telus is a buy....
ANDREW PELLER LTD. $15 (Toronto symbol ADW.A; Income Portfolio, Consumer sector; Shares outstanding: 14.3 million; Market cap: $214.5 million; Price-to-sales ratio: 0.7; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.andrewpeller.com) is Canada’s second-largest producer of wines, after Vincor International. The company has wineries in Nova Scotia, Ontario and British Columbia. In the first quarter of its 2015 fiscal year, which ended June 30, 2014, Peller’s sales rose 9.3%, to $79.5 million from $72.7 million a year earlier. That’s partly because it started selling its Wayne Gretzky wines in Western Canada. It also launched several new products, such as skinnygrape spritzers and Panama Jack cocktails. However, strong price competition and higher sales of lessprofitable brands cut Peller’s earnings by 19.4%, to $4.1 million, or $0.30 a share, from $5.1 million, or $0.37....
THOMSON REUTERS CORP. $42 (Toronto symbol TRI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 803.7 million; Market cap: $33.8 billion; Price-to-sales ratio: 2.6; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.thomsonreuters.com) sells information products in four areas: financial (55% of revenue, 37% of earnings); legal (27%, 41%); tax (10%, 12%); and intellectual property and science (8%, 10%). The Americas supply 60% of its revenue, followed by Europe (29%) and Asia (11%). Thomson’s revenue rose 6.2%, from $13.0 billion in 2009 to $13.8 billion in 2011 (all amounts except share price and market cap in U.S. dollars). That’s partly due to acquisitions, particularly in developing markets like Brazil. These new businesses helped offset lower sales at its main financial division as banks and brokers cut their spending after the 2008/2009 financial crisis. Asset sales hurt revenue growth...
IMPERIAL OIL LTD. $56 (www.imperialoil.ca) has begun converting its 95-year-old refinery in Dartmouth, Nova Scotia, into a storage facility for a variety of refined petroleum products, such as gasoline, diesel and home heating oil. It will take several years to compete this conversion, but the refinery was losing money, so this project should boost Imperial’s long-term earnings. Best Buy. LOBLAW COMPANIES LTD. $55 (www.loblaw.ca) is testing a smaller version of its discount No Frills supermarkets. These stores, which operate under the Box banner, are cheaper to build than full-sized outlets and can fit in smaller strip malls, which lowers their rental costs. The new Box stores could also help Loblaw compete with Wal-Mart, which may start opening smaller locations in Canada following successful trials in the U.S. Buy. CANADIAN NATIONAL RAILWAY CO. $80 (www.cn.ca) is now 13% owned by Microsoft co-founder Bill Gates. Ottawa limits any single shareholder from owning more that 15% of CN, so Mr. Gates has little room to increase his stake. Still, his involvement has helped draw investor attention to CN’s strong long-term growth prospects. Buy.