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
In January 2011, U.S. department store operator Target Corp. (New York symbol TGT) announced that it was expanding into Canada. The news helped push down Canadian Tire’s shares from $66 to $52 in August 2011. However, the stock quickly rebounded. After all, Canadian Tire has many years of experience competing with large U.S. retailers like Wal-Mart and Home Depot. That will help it handle Target. As well, it has been spending heavily on new stores and acquisitions. These measures have already attracted new customers and pushed up its earnings. CANADIAN TIRE CORP. $67 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.5 million; Market cap: $5.5 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.canadiantire.ca) gets 90% of its revenue and 80% of its earnings from its various retail stores....
HOME CAPITAL GROUP INC. $45 (Toronto symbol HCG; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 34.8 million; Market cap; $1.6 billion; Price-to-sales ratio: 2.3; Dividend yield: 2.0%; TSINetwork Rating: Average; www.homecapital.com) offers mortgages and other loans to borrowers who don’t meet the stricter criteria of larger, traditional lenders. The company is seeing higher demand for mortgages. That’s mainly because fears of higher interest rates and slowing housing prices have prompted Canada’s big banks to make fewer loans to riskier borrowers. In the three months ended March 31, 2012, Home Capital’s revenue rose 16.3%, to $214.7 million from $184.6 million a year earlier. Earnings per share rose 16.0%, to $1.52 from $1.31....
These three media companies continue to cut their costs and streamline their businesses in response to rising competition from free information on the Internet. The resulting savings have kept them profitable and let them maintain—or raise—their dividends. They have also been making acquisitions, often at bargain prices. THOMSON REUTERS CORP. $30 (Toronto symbol TRI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 829.2 million; Market cap: $24.9 billion; Price-to-sales ratio: 1.7; Dividend yield: 4.3%; TSINetwork Rating: Above Average; www.thomsonreuters.com) gets 58% of its revenue and 48% of its earnings by selling news and information products to professionals in the banking industry and the legal (25%, 32%), accounting (10%, 11%) and scientific research (7%, 9%) fields. Over 85% of the company’s revenue comes from products it sells under subscriptions and contracts. That gives it predictable revenue streams and cuts its risk. As well, more of its customers are switching from printed to electronic products; that’s lowering its printing and postage costs....
TRANSCANADA CORP. $43 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 704.0 million; Market cap: $30.3 billion; Price-to-sales ratio: 3.3; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.transcanada.com) has settled on a new route for its proposed Keystone XL pipeline that would avoid environmentally sensitive areas in Nebraska. When the pipeline is finished, it will pump crude oil from Alberta’s oil sands to refineries on the U.S. Gulf Coast. The U.S. government initially refused to approve the project, but TransCanada feels this new route will help it win the necessary permits. The company aims to begin building the pipeline in early 2013. It could begin operating by the end of 2014. TransCanada is a buy.
CENOVUS ENERGY INC. $33 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 755.6 million; Market cap: $24.9 billion; Price-to-sales ratio: 1.5; Dividend yield: 2.7%; TSINetwork Rating: Extra Risk; www.cenovus.com) produced an average of 156,850 barrels of oil per day in the three months ended March 31, 2012. That’s up 14.2% from 137,355 barrels a day a year earlier. The gain is mostly the result of Cenovus’s ongoing expansion of its Alberta oil sands properties. Production of conventional oil also rose 10.2%. The company recently started shipping oil to Asia. That lets it sell this oil at international prices, which are higher than what it can get from North American refineries....
SAPUTO INC. $44 (Toronto symbol SAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 199.2 million; Market cap: $8.8 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.7%; TSINetwork Rating: Average; www.saputo.com) is Canada’s largest producer of dairy products, including milk, butter and cheese. It also makes snack cakes and tarts. The company operates in the U.S., Argentina and Europe. In its fiscal 2012 third quarter, which ended December 31, 2011, Saputo’s earnings rose 15.8%, to $129.8 million from $112.1 million a year earlier. Earnings per share rose 18.5%, to $0.64 from $0.54, on fewer shares outstanding. Sales rose 17.1%, to $1.8 billion from $1.5 billion. These gains mainly reflect the contribution of DCI Cheese, a specialty cheese distributor in the U.S., which Saputo bought for $270.5 million in March 2011. Higher selling prices for cheese in Canada and Argentina also contributed to the sales increase. However, the milk pricing formula in California recently changed; that’s hurting profit margins at Saputo’s U.S. operations....
These two utilities offer an attractive combination of growth and income. Investors who are looking for stronger growth should choose ATCO, while income seekers should opt for Canadian Utilities. CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $72 and CU.X [class B voting] $72; Income Portfolio, Utilities sector; Shares outstanding: 127.6 million; Market cap: $9.2 billion; Price-to-sales ratio: 3.0; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.canadianutilities.com) distributes electricity and natural gas in Alberta. It also operates 19 power plants in Canada, Australia and the U.K. ATCO Ltd. (see below) owns 52.7% of the company. In July 2011, Canadian Utilities paid $1.1 billion for a company that distributes natural gas in Perth, Australia. This purchase helped push up revenue by 3.5% in the first quarter of 2012, to $837 million from $809 million a year earlier. Earnings rose 9.7%, to $193 million from $176 million. Because it had more shares outstanding, its earnings per share rose at a slower pace of 8.3%, to $1.44 from $1.33....
FINNING INTERNATIONAL INC. $26 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 171.9 million; Market cap: $4.5 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.finning.com) has won a contract to supply U.K.-based Hargreaves Services plc with heavy equipment made by Caterpillar, including four hydraulic excavators and 19 trucks. Finning will start delivering this equipment later this year. The deal is worth $96 million, which is just 2% of its annual revenue of $5.9 billion. However, this was Finning’s first sale from its new distribution and support businesses in western Canada, South America and the U.K. Finning bought these operations from Bucyrus International for $465 million U.S. in May 2012. Finning is a buy.
ENBRIDGE INC. $40 (Toronto symbol ENB; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 785.0 million; Market cap: $31.4 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.enbridge.com) owns 100% of Enbridge Gas New Brunswick Inc. (EGNB), which distributes natural gas to 11,000 customers in that province. Enbridge is now expanding EGNB’s system to connect to an additional 30,000 clients. However, the New Brunswick government recently enacted new regulations that limit the rates that EGNB can charge its customers. That makes it harder for Enbridge to recoup the funds that it has already invested in this business. As a result, the company will write down this investment by $262 million. That’s equal to 24% of the $1.1 billion, or $1.48 a share, that Enbridge earned in 2011. Enbridge is still a buy....
PENGROWTH ENERGY CORP. $8.41 (Toronto symbol PGF; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 364.5 million; Market cap: $3.1 billion; Price-to sales ratio: 1.9; Dividend yield: 10.0%; TSINetwork Rating: Average; www.pengrowth.com) reported that its daily production rose 2.7% in the three months ended March 31, 2012, to 75,618 barrels of oil equivalent from 73,634 a year ago. Because of depressed natural gas prices, the company is shifting its focus to oil, which accounted for 77% of its production compared with 61% a year earlier. Even with the higher production, weak gas prices and higher royalties cut Pengrowth’s cash flow by 22.6% in the quarter, to $113.6 million from $146.8 million a year earlier. Cash flow per share fell 31.1%, to $0.31 from $0.45, on more shares outstanding. However, the company’s high-quality western Canadian properties and its upcoming all-stock purchase of NAL Energy (Toronto symbol NAE) should let it take better advantage of high oil prices....