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
ENCANA CORP., $28.92, Toronto symbol ECA, reported sharply higher earnings this week. In the three months ended June 30, 2011, Encana earned $166 million, or $0.22 a share (all amounts except share price in U.S. dollars). That’s up 151.5% from $66 million, or $0.09 a share a year earlier. These figures exclude several unusual items, particularly losses related to hedging and foreign exchange. On this basis, the latest earnings easily beat the consensus estimate of $0.14 a share. Even so, cash flow per share fell 10.9%, to $1.47 from $1.65. That’s mainly because the company’s average selling price for gas fell 7.5% to $5.09 per thousand cubic feet from $5.50 a year earlier (gas accounts for 96% of Encana’s overall production). Average daily gas production rose 3.3%. Encana sold its oil for at an average price per barrel of $92.66, up 38.2% from $67.05....
CANADIAN IMPERIAL BANK OF COMMERCE, $74.13, Toronto symbol CM, is buying 41% of U.S.-based American Century Investments, which sells mutual funds and wealth management services to institutional and individual investors. CIBC will have a 10.1% voting interest in this private company. The bank is paying $848 million U.S. for this investment. That’s equal to 1.2 times the $678 million (Canadian), or $1.60 a share, that CIBC earned in its second fiscal quarter, which ended April 30, 2011. The purchase should close by the end of October 2011, and add $0.15 a share to CIBC’s fiscal 2012 earnings. American Century has $112 billion U.S. in assets under management, so this purchase looks like a bargain for CIBC. That’s largely because American Century’s founder will still hold a majority stake in the company. Even so, it’s likely that CIBC will eventually gain control of this business. The purchase also lets CIBC offer other financial services to American Century’s high-quality clientele....
Pengrowth quickly became Canada’s largest oil and gas income trust after it was formed in 1989. As a trust, it paid out most of its cash flow to its unitholders. That left it with little to invest in exploration or growth projects. At the start of 2011, Pengrowth converted to a corporation in response to the federal government’s new tax on income-trust distributions, which came into effect on January 1 of this year. Unitholders received one common share for each unit they held. Now that it is a corporation, Pengrowth is using some of the cash from its conventional properties to expand into more risky areas, such as oil sands and shale gas. However, these projects have strong long-term potential, and their cash flows will help Pengrowth maintain its high dividend yield....
CGI GROUP INC. $23 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 264.6 million; Market cap: $6.1 billion; Price-to-sales ratio: 1.4; No dividends paid; TSINetwork Rating: Extra Risk; www.cgi.com) has gained 27.1% since we named it our “#1 Stock of the Year” for 2011. CGI is Canada’s largest provider of computer-outsourcing services. The company’s services can automate certain routine functions, such as accounting and buying supplies. That makes its clients more efficient. The company’s strong reputation continues to help it win new contracts....
When picking high dividend stocks, we continue to recommend that you look beyond yield (dividend rate divided by share price). Instead, focus on high-quality companies with long histories of rising payouts, such as these four utilities (including Canadian Utilities, see box on page 74). Their steady cash flows are helping them maintain or raise their dividends, and invest in new growth projects. FORTIS INC. $32 (Toronto symbol FTS; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 196.8 million; Market cap: $6.3 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www.fortisinc.com) is the main supplier of electrical power in Newfoundland and Prince Edward Island. It also operates power plants in other parts of Canada, as well as the U.S., Belize and the Cayman Islands. In addition, Fortis operates hotels and other businesses in Canada. The company has been working to lower its reliance on Atlantic Canada. In May 2004, it bought regulated electrical utilities in Alberta and B.C. for $1.5 billion in cash and stock. In May 2007, it paid $3.7 billion for the regulated gas-distribution business of Terasen Inc. (now called FortisBC Energy), which has 940,000 customers in B.C. Fortis issued $1.15 billion of shares to help pay for this purchase....
GENNUM CORP. $7.09 (Toronto symbol GND; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.6 million; Market cap: $252.4 million; Price-to-sales ratio: 1.8; Dividend yield: 2.0%; TSINetwork Rating: Average; www.gennum.com) makes equipment for TV broadcasters that stores, manipulates and transfers video signals. It also makes chips that make computer networks work more quickly. On April 6, 2011, Gennum acquired Nanotech Semiconductor Ltd. for $35.9 million (all amounts except share price and market cap in U.S. dollars). Based in Bristol, U.K., Nanotech designs chips for high-speed communication networks. In its 2011 second quarter, which ended May 31, 2011, Gennum earned $3.6 million, or $0.10 a share, down 12.5% from $4.1 million, or $0.12 a share, a year earlier. The drop was mainly due to the costs of the Nanotech acquisition. However, sales rose 8.7%, to $34.4 million from $31.7 million. That’s entirely due to the Nanotech purchase, which added $2.2 million to Gennum’s sales....
CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $57 and CU.X [class B voting] $57; Income Portfolio, Utilities sector; Shares outstanding: 125.9 million; Market cap: $7.2 billion; Price-to-sales ratio: 2.6; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.canadian-utilities.com) earned $166 million in the three months ended March 31, 2011. That’s up 7.8% from $154 million a year earlier. Earnings per share rose 6.6%, to $1.30 from $1.22, on more shares outstanding. Revenue rose 6.6%, to $809 million from $759 million. Higher selling prices for electricity offset lower prices for natural-gas storage. The strong results prompted the company to raise its quarterly dividend by 6.6%, to $0.4025 a share from $0.3775. The new annual rate of $1.61 yields 2.8%. This was the 39th consecutive year that Canadian Utilities raised its dividend. Canadian Utilities is a buy. The more liquid class “A” non-voting shares are the better choice.
RESEARCH IN MOTION INC. $27 (Toronto symbol RIM; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 524.1 million; Market cap: $14.2 billion; Price-to-sales ratio: 0.7; No dividends paid; TSINetwork Rating: Above Average; www.rim.com) has dropped by 50% since March 2011, and now trades at a low 5 times earnings. That’s mainly because the company has run into delays in launching new smartphones. As a result, RIM is losing market share, particularly in the consumer market, to the Apple iPhone and smartphones powered by Google’s Android operating system. RIM’s recent problems have drawn comparisons with one-time tech giant Nortel Networks, which went bankrupt in 2009. However, Nortel bought a number of telecom companies during the Internet boom of the early 2000s, when telecom was headed for a deep decline. In contrast, the smartphone industry continues to grow rapidly, particularly overseas. RIM now has 68 million users worldwide, up 24% from 55 million users in November 2010....
Loblaw and Metro have cut their costs and upgraded their inventory-management systems. The resulting savings are helping increase their profits, even with higher food costs and rising competition. Loblaw has a higher p/e ratio than Metro, but that reflects its wider geographic reach and expansion into non-food businesses, like clothing. Metro’s subordinate-voting shares also weigh on its p/e. LOBLAW COMPANIES LTD. $39 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 280.6 million; Market cap: $10.9 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.loblaw.ca) is Canada’s largest food retailer, with 1,000 company-owned and franchised stores. Loblaw continues to offer more private-label foods, including its President’s Choice products. It earns higher profits on these items than national brands. That’s part of the reason why Loblaw’s earnings rose 22.7% in the quarter ended March 26, 2011, to $162 million, or $0.58 a share. A year earlier, it earned $132 million, or $0.48....
ROYAL BANK OF CANADA $53 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.4 billion; Market cap: $74.2 billion; Price-to-sales ratio: 2.1; Dividend yield: 4.0%; TSINetwork Rating: Above Average; www.rbc.com) plans to enter the fast-growing market for exchange-traded funds (ETFs) in Canada. The bank will offer eight new ETFs that will mirror the performance of various corporate bond indexes. Unlike regular mutual funds, ETFs trade on stock exchanges. They also have lower management fees. This move will help Royal compete with large, U.S.-based investment firms, such as Vanguard Group Inc., which will soon start selling its ETFs to Canadian investors. Royal Bank is a buy.