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
LINAMAR CORP. $64 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.8 million; Market cap: $4.1 billion; Price-to-sales ratio: 1.1; Dividend yield: 0.6%; TSINetwork Rating: Average; www.linamar.com) gets around 80% of its revenue by making engines, transmissions and other precision-machined parts for automakers. It has 44 plants in North America, Europe and Asia. The remaining 20% of Linamar’s revenue mainly comes from self-propelled, scissor-type elevating work platforms, which it sells under the Skyjack name. The company also makes other industrial machinery, such as parts for wind farms. Pent-up car demand boosted results...
NORDION INC. $14 (www.nordion.com) recently accepted a $13.00 U.S.-a-share friendly takeover bid from Sterigenics, a privately held Illinois firm that sterilizes surgical tools, drug ingredients and other materials. Competition regulators in Canada and the U.S. have decided not to challenge the sale. The deal still needs other approvals, but Sterigenics expects to complete it by the end of 2014. Hold. PRECISION DRILLING CORP. $15 (www.precisiondrilling.com) has sold some of its trucking operations in Texas and New Mexico for an undisclosed sum. These assets included trucks and related equipment that Precision uses to move its drilling rigs. The cash from the sale will help the company expand its main contractdrilling operations. Buy. BLACKBERRY LTD. $11 (www.blackberry.com) dropped 10% in response to a new alliance between Apple and IBM. Under the terms of the deal, IBM will develop business-related apps for Apple’s popular iPhone and iPad mobile devices. That could hurt sales of BlackBerry’s smartphones. However, BlackBerry already makes servers and software that securely handle Apple’s devices, as well as those powered by Google’s Android software. Hold.
BCE INC., $48.80, Toronto symbol BCE, fell slightly in response to the federal government’s new plan to auction off more blocks of high-quality wireless frequencies (or spectrum). Ottawa has set aside 60% of this spectrum for smaller wireless providers. It will also limit how much of the remainder that larger providers like BCE can buy. Ottawa hopes these moves will encourage other wireless carriers, which mainly operate in certain regions, to expand into other parts of Canada. The new rules are unlikely to substantially hurt BCE’s wireless operations, which supply 28% of its revenue. Meanwhile, the company continues to see strong demand for its Fibe service, which uses fibre optic cable to deliver high-speed Internet and digital TV. As of March 31, 2014, it had 534,110 Fibe TV subscribers in Ontario and Quebec, up 80.6% from a year earlier....
CAE INC., $14.29, Toronto symbol CAE, has won new contracts to supply flight simulators and related services and equipment to several military clients, including the German and New Zealand air forces. In all, these deals are worth $110 million, or 5% of CAE’s $2.1 billion of annual revenue. The company’s military-related businesses supply 40% of its revenue, which cuts its reliance on cyclical commercial airlines. CAE is our #1 buy for 2014....
SNC-LAVALIN GROUP INC., $55.89, Toronto symbol SNC, rose 7% this week after announcing a major acquisition. The company has agreed to buy U.K.-based Kentz Corp. Ltd. (London exchange symbol KENZ), which provides engineering and construction services to the oil and gas industry. Kentz operates in 36 countries, which should increase SNC’s exposure to fast-growing regions like the Middle East, Asia and Australia....
ENBRIDGE INC., $51.09, Toronto symbol ENB, has won approval from Ottawa for its Northern Gateway pipeline. Northern Gateway will pump crude from Alberta’s oil sands to Kitimat, B.C. From there, tankers would ship the oil to customers in Asia. It will cost $7.9 billion to build this project. That’s equal to 19% of Enbridge’s $42.7-billion market cap (or the value of all its outstanding shares). However, that estimate is sure to rise as other oil sands and pipeline projects drive up labour and material costs....
CANADIAN PACIFIC RAILWAY LTD., $200.48, Toronto symbol CP, and CANADIAN NATIONAL RAILWAY CO., $67.94, Toronto symbol CNR, both stand to gain as a lack of pipeline capacity in Western Canada forces oil producers to ship crude by rail. In 2013, oil shipments accounted for just 6% of CP’s revenue and 4% of CN’s revenue. However, an oil industry group now expects rail shipments to jump from 200,000 barrels a day in 2013 to 700,000 by 2016. Both companies are upgrading their networks to handle the rising demand. As well, Ottawa recently brought in new rules to phase out older tanker cars, like the ones that exploded in the July 2013 train crash in Lac-Mégantic, Quebec. Oil producers own most of these cars, so they would have to pay for their replacements, not the railways....
We’re generally skeptical of companies that use acquisitions to expand. That’s because even the most promising purchases can come with hidden problems and costs that offset the extra sales and earnings they bring. However, we feel Loblaw’s recent purchase of Shoppers Drug Mart sets it up for years of higher profits. The Shoppers takeover diversifies Loblaw’s business and lets it sell higher-margin items, like beauty products. That will help the company compete with big U.S. retailers like Wal-Mart and Target, which are aggressively expanding in Canada. LOBLAW COMPANIES LTD. $48 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 412.7 million; Market cap: $19.8 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.0%; TSINetwork Rating: Above Average; www.loblaw.ca) is Canada’s largest food retailer, with roughly 1,200 stores. Its banners include Loblaws, Provigo, Fortinos, Real Canadian Superstore and No Frills....
METRO INC. $67 (Toronto symbol MRU; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 87.0 million; Market cap: $5.8 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.8%; TSINetwork Rating: Average; www.metro.ca) is Canada’s third-largest supermarket operator, after Loblaw (also in this issue) and Sobeys....
Enbridge and TransCanada have risen strongly in recent months. That’s partly because low interest rates continue to encourage income-seeking investors to buy high-yielding utilities.
After their recent gains, both stocks now seem expensive in relation to their earnings....
After their recent gains, both stocks now seem expensive in relation to their earnings....